President Donald Trump planned Thursday to move forward in changing U.S. health care by signing an executive order aimed at expanding low-cost insurance options, which critics say will leave some with skimpy coverage and hurt already-struggling insurance markets.
This step would signal a shift in the administration’s strategy, which relied on Congress to repeal the Affordable Care Act. Trump is now using the force of his executive rule-making authority to implement long-favored GOP policy alternatives.
“With Congress the way it is, I decided to take it upon myself,” Trump said in remarks at the White House earlier in the week. Senate Republicans failed within recent months to pass legislation to overhaul the ACA.
In Thursday’s directive, Trump is expected to loosen rules around policies sold through “associations,” which can be for instance, professional-affiliation groups.
While details are sparse, it could effectively exempt more insurance plans from a number of ACA requirements.
The order also will likely instruct regulators to allow insurers greater leeway in selling low-cost, short-term insurance that can exclude coverage of policyholders’ preexisting medical conditions.
“A big percentage of people will be able to get health care,” Trump said, “and it will not cost our country anything, but they’ll have great, great health insurance again.”
Since Congress can't get its act together on HealthCare, I will be using the power of the pen to give great HealthCare to many people – FAST
— Donald J. Trump (@realDonaldTrump) October 10, 2017
The pros and cons
Proponents say allowing small businesses and possibly self-employed people to buy insurance through associations gives them more clout with insurers than buying their own plan on the individual market — and results in lower premiums.
But the real savings in premiums is likely to come because the policies could offer fewer benefits than more regulated ACA plans, and the associations would have more leeway to set premiums based on the health of the group.
Trump’s order is likely to please some groups, including the National Federation of Independent Business. This organization has long supported association health plans, which they say allows small businesses to buy coverage across state lines.
Critics warn that such plans, with pared-down coverage and lower premiums, could siphon off the healthiest consumers. Older, sicker people would be left to seek health insurance through more regulated plans available through state and federal insurance marketplaces. That could cause premiums to rise more rapidly for those groups.
Some consumer advocates also warn that association plans and short-term policies are generally less generous with benefits – and could leave some unwary consumers stuck with large medical bills. Such plans might not cover maternity care, for example, or prescription drugs.
Additionally, short-term plans can exclude paying for any preexisting medical conditions, either upfront or upon renewal, something the ACA bars for all other types of insurance.
Legal challenges to the executive order could result from these issues.
For one thing, policy experts question whether the Trump administration can allow associations broad leeway to sign up individuals, rather than following the Obama administration’s strict definition of “rare instances” in which an association would qualify as an employer offering group coverage.
That distinction is important because a complex mix of laws cover employment-based insurance coverage, and rules can differ from those governing small-group or individual coverage.
It could be challenging “for them to extend [this coverage] to individuals who are not associated with an employer group,” said Kevin Lucia, a research professor at Georgetown’s Health Policy Institute.
Associations prefer to be viewed as employers offering large-group coverage because then their polices need not cover all 10 of the ACA’s “essential health benefits,” which include things like hospitalization, drug coverage, maternity care and substance abuse treatment.
Insurers can also vary premiums for large groups based on medical claims history of the overall group, so younger, healthier groups would likely get lower premiums.
In the individual market, insurers cannot base a premium on a policyholder’s health.
A speckled past
Association health plans are not new. They’ve been around for decades, and Republicans have traditionally eyed them as a means to make it easier for small businesses and individuals to band together to buy insurance.
In the past, though, some had solvency problems and went bankrupt, leaving consumers on the hook with unpaid medical bills.
In several states, regulators investigated whether the plans were advertising that they had comprehensive coverage when, in fact, they provided little or no coverage for such things as chemotherapy or doctor office visits.
The ACA answered some of those concerns by setting minimum standards for coverage on most insurance policies, including association plans, which prevents them from skimping on such things as doctor visits or prescription drugs.
Their numbers fell after the sweeping law went into effect.
Meanwhile, the Trump proposal also would allow people to buy short-term plans that last up to 364 days, overturning an Obama administration rule limiting short-term policies to 90 days.
Advocates of the change have always argued that this limit just meant people had to renew more often — and then face their deductibles all over again.
How will association plans fare?
Joe Antos, at the conservative American Enterprise Institute, questions how popular such plans would be with both consumers and insurers.
“The people on the left who say this will doom the exchange marketplace are, as usual, exaggerating the likely effects of this,” said Antos.
That’s because many of the approximately 9 million people who currently buy coverage through federal or state insurance marketplaces get a premium subsidy to help them purchase. They are unlikely to switch from that, he said.
The main group that it would appeal to are the additional 10 million or so who buy coverage because they don’t get it through their jobs, and don’t get a subsidy.
Key will be just what the plans cover — and what they exclude.
“They’ll only be attracted if these association plans actually provide them coverage they want at a price that is better than the exchange plans,” said Antos.
Critics of ACA rules requiring policies to cover maternity care or mental health conditions have always cited these dictates as a reason for high premiums. Antos noted, though, that those costs pale when compared with the expense of what most people want, such as coverage for hospitalization.
“That’s really expensive,” said Antos. “But no one wants coverage that excludes hospitalization.”
So, insurers — if they even want to back association coverage — may end up offering coverage “that will look a lot like the exchange plans,” Antos said.