Health care order expands insurance

It’s separate from effort to stop paying price stabilization subsidies: Opposing view

For all the headlines about “dismantling Obamacare,” President Trump’s executive order will likely have less of an impact than its supporters hope or critics fear. Still, it represents a modest step toward giving consumers more choices and expanding millions of Americans’ access to lower cost insurance that better fits their individual needs.

The executive order has several main components. First, it calls generally for expanding competition and choice in health care markets and for improving the information available to consumers while reducing reporting burdens (that would presumably be needed to make that information available). Second, it directs the Department of Health and Human Services, in cooperation with the Secretaries of Treasury and Labor and the Federal Trade Commission, to report to the President within 180 days and every 2 years thereafter on steps that could be taken to accomplish these goals.

The primary operative parts of the executive order, however, are provisions that direct the Departments of Treasury, Labor, and Health and Human Services to consider making changes in current regulations and guidance governing health care coverage in three specific areas. First, the executive order directs the Department of Labor to consider within 60 days new rules and guidance “to expand access to health coverage by allowing more employers to form AHPs [association health plans].”

First, understand what this order is not. It neither takes anyone’s insurance away nor removes protections for people with pre-existing conditions.

What it does is allow small businesses that band together to buy group insurance plans to be treated the same way as big companies are today. That includes the ability to buy insurance across state lines, and an exemption from some of Obamacare’s expensive mandated benefits. Plans might offer fewer benefits, but they could cost a lot less.

OUR VIEW:Trump sells out your health insurance

Individuals within a company still can’t be charged more or denied coverage because of their health, but companies with healthier work forces could receive lower overall premiums. And purchasing insurance across state lines challenges the power of the insurance cartel’s monopoly power in some states.

If individuals end up being allowed to buy insurance on these association plans, it would dramatically expand options for millions of Americans.

This wouldn’t come close to fixing all of Obamacare’s problems, but it’s still a win for consumers.

This executive order should be considered separately from the administration’s effort to stop paying price stabilization subsidies to insurance companies. In that case, the administration is essentially complying with a federal court ruling that the subsidies were illegal. Yes, if the subsidies stop it could further destabilize insurance markets, but that was starting to happen anyway.

The executive order begins by reciting perceived failures of the Affordable Care Act (ACA): rising premiums for ACA coverage, reduced insurer participation in exchanges, and reduced exchange enrollment. There is some truth in these assertions. However, many of the problems the individual market is experiencing are certainly due to actions the Trump administration has taken to undermine ACA coverage, and there is good evidence that the ACA market could have stabilized absent those actions. This post, however, specifically addresses the Trump administration executive order, the legality of the measures it proposes, and their likely effects, not the claims it makes.

 

Ideally, Congress should have rewritten the Affordable Care Act, and in using an executive order to rewrite parts of the health care law, President Trump is following a route repeatedly trod by President Obama. Only this time, the president’s actions will give consumers more freedom rather than less.

Michael D. Tanner is a senior fellow at the Cato Institute.

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