President Trump signed an executive order that could — emphasis on could— do substantial damage to the Obamacare marketplaces.
Trump's order sets out two goals with major consequences for the insurance market, if they come to pass:
- Make it easier to set up association health plans and for those plans to be considered part of the large-group market
- Expand the definition of "short-term limited-duration insurance" from three months to nearly a year
If you want the full wonky breakdown, I wrote about the order and its potential effects on the Affordable Care Act here. But this is the gist: The White House wants to make it easier for people to buy cheaper and skimpier coverage that doesn't comply with the Affordable Care Act's rules.
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The risk, according to health policy experts, is that young and healthier people will flock to this skimpier coverage, making the Obamacare markets older and sicker. That is going to drive up premiums for people still buying coverage through the health care law.
But Trump's pen isn't magic. The executive order doesn't actually do anything on its own. Which is confusing! In fact, a lot about the executive order is hard to decipher.
Here are some of the big questions, and my best attempts to answer them.
1) When does this actually go into effect?
Trump has technically asked federal agencies to consider issuing new regulations that achieve the executive order's goals. That's all.
Federal rulemaking takes some time, months upon months. Senior administration officials told reporters today that they didn't expect any changes to be made before the end of the year.
2) Which Obamacare regulations are actually being targeted?
This answer comes in two buckets.
For association health plans: If they can be considered large-group plans, they no longer have to comply with Obamacare's requirement that they cover certain essential health benefits. Large employers are exempt from that rule, which is limited to individual and small-group plans.
For short-term insurance: These plans are completely free from the ACA's regulations. Carriers can deny people coverage based on their medical history, charge people higher premiums based on their health status, and limit their benefits significantly more than the health care law allows.
3) Can individuals buy into association health plans?
This is maybe the biggest question. Experts generally agree that if individuals are allowed to join the association plans, the impact on the Obamacare marketplaces will be much more severe.
The executive order itself seems to limit the plans to businesses. But administration officials, in their call with reporters, indicated that they will look at whether they can allow self-employed people to buy into these associations.
"That is both a legal and policy question," one official said, adding it was "potentially possible" to allow those people to join associations.
4) Will this coverage be considered compliant with the individual mandate?
This is another issue with huge consequences. The one deterrent for people absconding to these skimpy plans, particularly the short-term insurance, is that they could still be subject to the individual mandate because the plan doesn't qualify as minimal coverage.
But if that changes, people would have even more incentive to abandon Obamacare and buy these skimpier plans, which would further damage the law's markets.
In the call with reporters, administration officials were coy. They simply noted that the executive order didn't address what is considered minimal coverage. They did point out that large-group coverage, which is what many association plans may soon be considered, is generally found to satisfy the mandate.
Any further changes to that threshold, particularly if the Trump administration makes short-term coverage compliant, would be a game changer.
5) What can states do?
We won't know until we see the regulations how much the traditional state authority to regulate association health plans and short-term insurance will be preempted. But experts are watching closely.
If states still have significant oversight, they could — if they so chose — potentially do a lot to limit people migrating to these skimpier plans.
But the Trump administration may try to write the new rules to handcuff states as much as possible.
6) Can these changes be challenged in court?
We simply won't know for sure until the administration proposes some actual regulations.
"It's just a set of marching orders," Nicholas Bagley, a law professor at the University of Michigan, said of the executive order.
"We can speculate about what the agencies might do, and whether what they might do might be unlawful," he added. "But it's hard to handicap the odds of a challenge to something that hasn't yet happened."