Thwarted by the Republican Congress's inability to take health insurance away from millions of people, Donald Trump is continuing his efforts to dismantle the Affordable Care Act from the inside. He's expected to sign executive orders on Thursday intended to siphon off healthy Obamacare enrollees into skimpy cheaper plans. The order will loosen rules for what these plans have to cover and who they have to cover, like people with pre-existing conditions. The cumulative effect of the new rules he's ordering will be to damage Obamacare's regulated markets, leaving just the sickest, most expensive patients there. A press release issued by the White House in advance of his signing the orders is short on details, heavy on rhetoric attacking Obamacare, but generally follows what previous leaks and news reports have suggested he will do.
He's got a three-bladed hatchet that he's taking to the law, one that will make it easier for people to create "association health plans" and exempt those plans from some of the rules that apply to other plans. He'll also extend the lifespan of already existing short-term medical insurance, low-cost plans that offer limited protection. Now they're limited at three months but he's likely to extend that to 12 months and make them renewable. Finally he's expected to allow people to use accounts known as Health Reimbursement Accounts to pay for premiums. This would allow companies to use pre-tax dollars to help workers pay for premiums, not just other out-of-pocket costs.
The most consequential and damaging element of this is the AHP expansion, allowing small businesses, trade associations, and as-of-yet undefined others to group together to purchase health insurance that would be exempt from some of the existing Obamacare rules. Plans would be exempt from covering all of the essential health benefits now required, like prescription drug coverage, or maternity or mental health care. The plans would be much cheaper, pulling small business and other groups out of the Obamacare markets, leaving the sick people—and the ones who need more comprehensive coverage—in those markets, where premiums would get more and more expensive.
And it’s happening.
"Within a year, this would kill the market," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation who previously worked at former President Barack Obama’s HHS Department. […]
"No one healthy is now going to sign up in the ACA risk pool, because they have this cheaper option," said Deep Banerjee, a health care analyst at S&P Global Ratings. "It just takes away the opportunity of this risk pool getting better."
Because it is an irrational obsession of Trump and the Republicans, these AHPs will be able to band across state lines, according to the White House press release. But as of now, it appears that the new rules won't allow for individuals to buy into AHPs, which is the limited good news here. That would require the administration come up with a really strained definition of what an association could be under ERISA, the massive law that governs most workplace benefits. Some insurance companies have reportedly threatened lawsuits if the administration tries to redefine the individual markets as part of ERISA.
"How that doesn't get challenged, how that isn't such an expansive interpretation of ERISA that goes beyond the administration's authority — someone's absolutely going to" bring a legal challenge, said an insurance industry official, who requested anonymity to discuss strategy. "This is chaos."
There's going to be chaos regardless. Trump promises it. It's going to mean more people lose the coverage they have. It means more people end up with coverage that doesn't help them. And it's going to be all on him and the Republicans in 2018 and 2020.