New Executive Order Could Hurt Consumers

By Consumers for Quality Care, on October 12, 2017

In the wake of the failed ACA repeal and replace, President Trump has signed an executive order on health care, which could have a negative impact on consumers. Former CMS Director Andy Slavitt has argued the move would eliminate protections for pre-existing condition protections and make the individual exchanges a high-risk pool.

The White House has said the executive order will aim at expanding insurance options for individuals who currently get their insurance on their own or through small group markets. According to the Wall Street Journal, it will likely instruct agencies to loosen regulations in three areas: association health plans, short-term plans, and health reimbursement accounts.

Together, “[t]he three moves would represent the most substantive step the White House has taken to date in paring back Affordable Care Act rules using administrative powers.”

The executive order would direct the departments of Health and Human Services, Labor, and Treasury to make it easier for individuals to buy association health plans.  These plans are expected to be exempt from certain ACA rules.

Politico reports that the Labor Department would be directed to allow plans to be sold across state lines through association health plans.

If the administration were to free [States] from those rules, those plans could charge far lower premiums for a skimpier set of benefits — aiming to attract the healthiest and cheapest enrollees while potentially leaving Obamacare plans with higher-cost customers.

The administration is also expected ease restrictions on “short-term medical insurance.”  These plans were banned under ACA as they provided limited protection for consumers. The executive order would allow consumers to purchase this kind of plan for coverage for up to a year.

The Obama administration banned the sale of those plans that offered coverage for more than 90 days, arguing they were inadequate for people’s needs. Some industry officials have pressed the administration to restore them, saying that when marketed honestly they can fit the needs of particular consumers currently priced out of buying the more generous coverage available as a result of the 2010 health-care overhaul.

The executive order is expected to expand the use of health reimbursement accounts (HRAs).  HRAs are employer-funded accounts that allow employees to pay out-of-pocket for medical-related costs.  Trump’s order is expected to reverse Obama-era guidance that blocked HRA pretax employer dollars from being used to purchase insurance on the individual market.

Critics argue that the executive order would hurt consumers, further endanger ACA marketplaces, and push consumers to riskier health plans.  According to the Washington Post:

In theory, letting people buy cheaper, leaner plans sounds great. Until you’re diagnosed with a chronic condition or serious disease. Experts say that if insurers are allowed to sell stripped-down plans, the move will prompt healthy people to exit the Obamacare marketplaces and flock to those plans instead.