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Here’s a quick guide to the meaning behind Trump’s executive order and decision to stop cost-sharing reduction payments.
As President Trump works to dismantle the ACA by way of signing an executive order and discontinuing subsidies to insurers, experts share five ways these actions could affect healthcare:
The executive order could potentially ease rules on the sale of “association health plans” and short-term, low-cost insurance policies, which are less-regulated and unlikely to include the same minimum coverage requirements as Obamacare plans.
These new offerings are likely to draw younger, healthier individuals out of the ACA marketplaces, which will cause older, sicker individuals to shoulder more of the cost burden of plans in state insurance exchanges that offer comprehensive coverage with essential benefits, says Rosemarie Day, president of Day Health Strategies
“This will happen primarily in the ACA marketplaces-non-group insurance-but could also impact small businesses,” she says. “What’s more, people enrolled in the association health plans could lose certain consumer protections. For example, the policies could exclude those with pre-existing conditions or base rates on an individual’s health background.”
2. Premiums could rise.
The cost-sharing payments are paid to insurers monthly to help offset the costs associated with the ACA. President Trump authorized the payments through October 2017, but on November 12 announced they are stopping immediately.
“This will harm insurers who were doing business in good faith in the ACA marketplaces-they will have to absorb this loss,” says Day. “This is likely to push more insurers out of the ACA marketplaces; others will have to raise rates, which will hurt individuals who don’t qualify for subsidies.”
Jeffrey Hulburt, CEO of Beth Israel Deaconess Care Organization, says the abrupt move to end healthcare subsidies with no transition period is a transparent, risky political maneuver that could have a drastic, irreversible negative impact on the insurance market.
“There’s no transition period or guidance to help states navigate the abrupt loss of millions of dollars in federal support,” Hulburt says. “This sudden, drastic move is a bold political maneuver aimed at forcing Congress to take action.”
3. Bipartisan solutions could lose importance.
“The focus will be off of finding a bipartisan solution to fix the ACA and distract us from other critical issues,” Day says. For example, reauthorizing the Children’s Health Insurance Program (CHIP), “which has long enjoyed bipartisan support,” she says.
4. There could be an expansion of association health plans and the three-month coverage duration limit put in place by the Obama administration related to short-term coverage could be lifted.
“While discussion preceding the order focused mainly on the increased availability of association health plans, increasing the availability of short-term coverage would be both easier for the Trump Administration to achieve and perhaps more likely to impact the individual market in the near term,” says Mark Lutes, chair of the Epstein Becker Green’s board of directors and a member of the firm’s Health Care and Life Sciences practice, in Washington, D.C.
Generally speaking, Lutes believes that short-term health insurance coverage is less generous than ACA-compliant coverage, “making it more attractive to healthy and young consumers than compared to insurance sold on an ACA exchange,” he says.
5. New regulations related to the sale of insurance across state lines could lower costs.
While not yet entirely clear, the order appears to allow a resident of one state to buy an insurance plan domiciled in another state, according to David Reid, co-founder and CEO of EaseCentral.
“This will allow consumers to purchase coverage from states that have very few regulations at a lower cost because the plans will not be mandated to cover benefits important to special interest lobbies and other influential parties. On the other hand, a consumer that would like to pay more for certain benefits not required by their state, could do so by purchasing coverage based elsewhere,” he says.
“National carriers have been selling across state lines for years,” Reid says. “There is no magic or competitive force that lowers costs from this concept. The cost reduction stems from different coverage levels. States like New York, California and Minnesota require insurers to pay for things other states do not require. Therefore, coverage in other states costs less because they cover less. In many cases, the consumer would be perfectly satisfied with lesser coverage. To many, some of these required coverage items are not needed and they would prefer to buy a less expensive policy that meets their needs without unneeded costs.”
Lutes cautions that the executive order will not make any actual changes to the ACA-yet.
“Instead, the executive order directs agency leadership to begin the process of considering how to change various regulations and guidance to achieve the executive order’s policy goals,” he says. “This will take months and will likely feature ample opportunity for the healthcare industry to continue to comment on and influence the ultimate manifestation of these policies should they come to pass.”