By ROBERT PEAR and REED ABELSON
WASHINGTON – President Donald Trump signed an executive order Thursday that clears the way for potentially sweeping changes in health insurance, including sales of cheaper policies with fewer benefits and fewer protections for consumers than those mandated under the Affordable Care Act.
But most of the changes will not come until federal agencies adopt regulations, after an opportunity for public comments – a process that could take months.
The order resulted from Trump’s frustration with his inability to persuade a Republican-controlled Congress to repeal the Affordable Care Act, a pillar of President Barack Obama’s legacy.
Supporters of the current health law called the order “sabotage,” a way to destroy the Affordable Care Act without winning a majority in Congress.
Trump directed three Cabinet agencies to develop rules that would expand access to less expensive, less comprehensive insurance, including policies that could be sold by trade associations to their members and short-term medical coverage that could be offered by commercial insurers to individuals and families.
Many of the new insurance products could be exempt from requirements of the Affordable Care Act that Republicans say have contributed to sharp increases in premiums but that supporters say have created a baseline of care that has protected consumers from “junk insurance.”
Administration officials said they had not yet decided which federal and state rules would apply to the new products.
Trump’s order could eventually make it easier for small businesses to band together and buy insurance through new 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.
The action Thursday followed the pattern of previous policy shifts that originated with similar directives from the president. Within hours of his inauguration in January, Trump ordered federal agencies to find ways to waive or defer any provisions of the Affordable Care Act that might burden consumers, insurers or health care providers. In May, he directed officials to help people with religious objections to the federal mandate for insurance coverage of contraception.
Both of those orders were followed up with specific, substantive regulations.
In a summary of the new executive order, the White House said that a broader interpretation of federal law – the Employee Retirement Income Security Act of 1974 – “could potentially allow employers in the same line of business anywhere in the country to join together to offer health care coverage to their employees.” As a result, it said, “workers could have access to a broader range of insurance options at lower rates in the large group market.”
A White House official said that “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.
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 a firm 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 also directed the secretaries of the Treasury, labor and health and human services to find ways of expanding access to “short-term limited duration insurance.” And the White House said that such insurance “is not subject to costly Obamacare mandates and rules.”
Short-term policies could be particularly useful to people in counties where only a single insurer is offering plans in the Affordable Care Act marketplace, the White House said.
“In 2018,” it said, “more than 1,500 counties – nearly 50 percent of all counties – are projected to have only one option on their individual insurance exchanges.”
But short-term policies can 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 initiative is supported by business groups that see association health plans as a possible way to provide more affordable health insurance to their members. These include the National Federation of Independent Business, the National Association of Wholesaler-Distributors and the National Restaurant Association.
But consumer groups and the National Association of Insurance Commissioners, representing state officials, have opposed association health plans because they could be largely exempt from state regulation.
Association health plans “cherry-pick health groups,” making it more difficult for less healthy groups to find affordable coverage, the National Association of Insurance Commissioners told Congress this year.
Large employer-sponsored health plans are generally subject to fewer federal insurance requirements than small group plans and coverage purchased by individuals and families on their own.
They are generally not required to provide “essential health benefits,” such as emergency services, maternity and newborn care, mental health coverage and substance abuse treatment, although many do.
A decision by Obama appointees in 2011 discouraged the use of association health plans as a substitute for Affordable Care Act policies because officials feared they would be used to circumvent the law’s coverage mandates. The Obama administration said that coverage offered to dozens or hundreds of small businesses through a trade or professional association would not be treated as a single large employer health plan for the purpose of insurance regulation.
Instead, the Obama administration said, the government would look at the size of each business participating in the association, so that many small employers would still be subject to stringent federal rules.
The Trump administration now wants to make it easier for small businesses to buy less expensive plans that do not comply with some requirements of the 2010 law.
Large-group plans are still subject to some requirements of the Affordable Care Act. They generally must cover children up to age 26 on their parents’ plans, cannot impose lifetime limits on covered benefits and cannot charge co-payments for preventive services like mammograms and colonoscopies.
But they are generally exempt from the requirements to provide a specified package of benefits and to cover a certain percentage of the cost of covered services.