WASHINGTON — President Donald Trump signed an executive order Thursday that clears the way for potentially sweeping changes to the country’s health insurance system, including sales of cheaper policies with fewer benefits and protections for consumers than those mandated under the Affordable Care Act.
The president’s plan, an 1,100-word directive to federal agencies, laid the groundwork for an expanding array of health insurance products, mainly less comprehensive plans offered through associations of small employers and greater use of short-term medical coverage.
It was the first time since efforts to repeal the landmark health law collapsed in Congress that Trump has set forth his vision of how to remake the nation’s health care system using the powers of the executive branch. It immediately touched off a furious debate over whether the move would fatally destabilize the Affordable Care Act marketplaces or add welcome options to consumers complaining of high premiums and not enough choice.
In Congress, the move seemed to intensify the polarization over health care. The Senate majority leader, Mitch McConnell of Kentucky, said the president was offering “more affordable health insurance options” desperately needed by consumers. But the Senate Democratic leader, Chuck Schumer of New York, said Trump was “using a wrecking ball to single-handedly rip apart our health care system.”
Most of the changes will not occur until federal agencies write and adopt regulations implementing them. The process, which includes a period for public comments, could take months. That means the order will probably not affect insurance coverage next year, but could lead to major changes in 2019.
“With these actions,” Trump said at a White House ceremony, “we are moving toward lower costs and more options in the health care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.”
“This is going to be something that millions and millions of people will be signing up for,” the president predicted, “and they’re going to be very happy.'’
But many patients, doctors, hospital executives and state insurance regulators were not so happy. They said the changes envisioned by Trump could raise costs for sick people, increase sales of bare-bones insurance and add uncertainty to wobbly health insurance markets.
“Today’s executive order could leave millions of cancer patients and survivors unable to access meaningful coverage,'’ said Chris Hansen, president of the lobbying arm of the American Cancer Society.
In a statement from six physician groups, including the American Academy of Family Physicians, the doctors predicted, “Allowing insurers to sell narrow, low-cost health plans likely will cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options.”
While many health insurers remained silent about the executive order, some voiced concern that it could destabilize the market.
The Trump proposal “would draw younger and healthier people away from the exchanges and drive additional plans out of the market,” warned Ceci Connolly, chief executive of the Alliance of Community Health Plans. “In turn, premiums would continue to increase, threatening the security of affordable coverage for millions of working families.”
The Affordable Care Act has expanded private insurance to millions of people through the creation of marketplaces, also known as exchanges, where people can purchase plans, in many cases using government subsidies to offset the cost. It also required that plans offered on the exchanges include a specific set of benefits, including hospital care, maternity care and mental health services, and it prohibited insurers from denying coverage to people with pre-existing medical conditions.
The order’s quickest impact on the marketplaces would be the potential expansion of short-term plans, which are exempt from Affordable Care Act requirements. The Obama administration limited the length of time people could enroll in such plans because companies were marketing them to healthy customers and luring people away from Affordable Care Act marketplaces, said Sabrina Corlette, a research professor at Georgetown University. She predicted companies would seize the opportunity to resume sale of such policies, which are much less expensive than ACA plans. “There are companies that are poised to aggressively market this stuff,” she said.
Many health policy experts worry that if large numbers of healthy people move into such plans, it would drive up premiums for those left in Affordable Care Act plans because the risk pool would have sicker people.
“If the short-term plans are able to siphon off the healthiest people, then the more highly regulated marketplaces may not be sustainable,” said Larry Levitt, a senior vice president for the Kaiser Family Foundation. “These plans follow no rules.”
Short-term policies could be useful to people in counties where only one insurer is offering plans in the Affordable Care Act marketplace, according to a White House document.
But short-term policies can also limit benefits and charge higher premiums to people who have expensive medical conditions, a type of discrimination banned in policies regulated under the Affordable Care Act.
Trump’s order would also eventually make it easier for small businesses to band together and buy insurance through entities known as association health plans, which could be created by business and professional groups. A White House official said these health plans “could potentially allow American employers to form groups across state lines” — a goal championed by Trump and many other Republicans — allowing more options and the formation of larger risk pools.
Association plans have a troubled history. Because the plans were not subject to state regulations that required insurers to have adequate financial resources, some became insolvent, leaving people with unpaid medical bills. Some insurers were accused of fraud, telling customers that the plans were more comprehensive than they were and leaving them uncovered when consumers became seriously ill.
“This could turn back the clock three decades on small business insurance,” Levitt said. Without the oversight by states, “this could create an unregulated and risky market that we haven’t seen for decades,’ he said.
The order won applause from potential sponsors of association health plans, including the National Federation of Independent Business, the National Restaurant Association, the U.S. Chamber of Commerce and Associated Builders and Contractors, a trade group for the construction industry.
The White House released a document saying that some consumer protections would remain in place for association plans. “Employers participating in an association health plan cannot exclude any employee from joining the plan and cannot develop premiums based on health conditions” of individual employees, according to the document.
But state officials pointed out that an association health plan can set different rates for different employers, so that a company with older, sicker workers might have to pay much more than one with young, healthy employees.
“Two employers in an association can be charged very different rates, based on the medical claims filed by their employees,” said Mike Kreidler, state insurance commissioner in Washington.
Trump’s order followed the pattern of previous policy shifts that originated with similar directives to agencies to come up with new rules. Within hours of his inauguration in January, Trump ordered federal agencies to find ways to waive or defer provisions of the Affordable Care Act that might burden consumers, insurers or health care providers. In May, he directed officials to help employers with religious objections to the federal mandate for insurance coverage of contraception.
Both of those orders were followed up with specific, substantive regulations that rolled back policies of President Barack Obama.
In battles over the Affordable Care Act this year, Trump and Senate Republicans said they wanted to give state officials vast new power to regulate insurance because state officials were wiser than federal officials and better understood local needs. But under the executive order, the federal government could pre-empt many state insurance rules, a prospect that alarms state insurance regulators.
The National Association of Insurance Commissioners, representing state officials, has long opposed association health plans because they could be largely exempt from state regulation. Ted Nickel, president of the National Association of Insurance Commissioners, who is also the top insurance regulator in Wisconsin, said the proliferation of association health plans could further destabilize “already fragile markets.'’
Another part of Trump’s order indicates that he may wish to crack down on the consolidation of doctors, hospitals and other health care providers, a trend that critics say has driven up costs for consumers. Trump said administration officials, working with the Federal Trade Commission, should report to him within 180 days on federal and state policies that limit competition and choice in the health care industry.