Trump: Regulators should remove burdensome Obamacare penalties
President Trump's order Friday night could make it much easier for companies and individuals to avoid buying insurance under the Affordable Care Act while slashing how much that insurance actually covers.
Through an "executive order" that is both symbolic and at least vaguely substantive, Trump directed federal workers to make the law less of a burden to businesses and consumers, possibly by slashing or reducing penalties.
The move starts the unraveling of the ACA — which Trump and Congress have vowed to repeal — but signals that Trump wants to move faster than the legislative process.
The mandate requiring most people to have insurance is part of the law, which requires congressional action. The ACA granted the Department of Health and Human Services "really broad authority" to exempt people from the requirement to buy insurance, says health care economist John Goodman.
Trump ordered workers to "minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control."
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In practice, experts say HHS could do that through granting more people and businesses exemptions from the requirement that they buy or offer insurance. Currently, "hardship exemptions" are available to people for whom insurance would be too costly for a variety of reasons. This could be expanded to include more people who make above 100% of the federal poverty level, which is about $24,000 a year for a family of four.
A key complaint from insurers was that HHS made it too easy for people to buy insurance when they got sick and to drop it after they got care.
The Centers for Medicare and Medicaid Services reduced the types of life circumstances — such as a move or marriage — that can trigger these "special enrollment periods," but Goodman says the agency could make it even tougher.
Rather than subjecting companies to fines if they don't offer insurance to employees, HHS could also allow them to put money into health reimbursement accounts (HRAs) so workers could then use the money to buy insurance on the ACA exchanges, says Goodman, who helped draft one of the possible replacement bills pending in Congress,
About 6.4 million low-income people can‘t enroll in Medicaid or buy insurance on the exchange and get subsidies because their states didn't expand Medicaid. HHS could also delay the penalty for these people when they remain uninsured, Goodman says.
One of the key goals of the law was getting more people to get care before health issues become serious, which saves money. Preventive care, such as physicals and mammograms, have to be covered in full, and it would be politically controversial to change that. But HHS also has considerable leeway in how it defines "preventive care."
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The law also requires that several "essential health benefits" be covered, such as maternity care and addiction treatment. These are needed to spread the cost of treatment among everyone, but some regulatory actions could make it possible for insurers to put limits on the number of days hospital stays or prescriptions have to be covered, Goodman says. Contraceptive coverage with no out-of-pocket costs is also an administrative rule — and one that is widely expected to be changed.
Unlike the HHS secretary or CMS administrator, many other political appointees don't require Senate confirmation so can start working immediately.
For example, just hours after Trump was sworn in, Trump transition spokesman Philip Blando emailed reporters with the contact information for a new HHS spokesman, Matt Lloyd. A former spokesman for former Indiana governor and now-Vice President Pence, Lloyd also spent several years working for Pence while he was a House member. He did not respond to an email requesting comment on the executive order.
Executive orders don't give federal agencies powers "they didn't already have," says Kaiser Family Foundation Senior Vice President Larry Levitt. Friday's order didn't have to have a major effect on the ACA, however. HHS already has a lot of authority under the ACA so simply by directing them to "use all the authority they do have," the effect could be substantial, he says.
"This starts the gears moving," says Levitt. "I’d be surprised if anything happened until the secretaries are confirmed, but that could be quite soon."
Most major employers are what's known as "self insured," so instead of insurance companies covering their workers' claims, they pay them. Even after the ACA, these employers had a lot of flexibility in what they covered and some didn't even cover hospitalization. This was tightened through regulatory actions that Trump's appointees could reverse, says Goodman.
The Obama administration granted several states waivers from some of the rules governing their Medicaid programs if they expanded it to all adults under the federal poverty limit. They were not nearly as permissive as the Trump administration is expected to be though. For example, Indiana under Pence expanded Medicaid using a federal waiver.
The flexibility for states could include requirements that even the lowest income people have to be working to get benefits — something former HHS secretary Sylvia Burwell would not allow. The most likely changes overall, says Goodman, are "things viewed as friendly to the business community:"
Despite the threats to the market posed by an exodus of healthy consumers, the insurance industry lobby wasn't complaining late Friday.
"There is no question the individual health care market has been challenged from the start," said Kristine Grow, spokeswoman for America's Health Insurance Plans, said in a statement. "The president said he would take swift action to move our country to improve it, and he has."
As for everyone else, Levitt says "it introduces uncertainty and confusion for a lot of people, but it doesn’t change what anyone can buy right now." And there are 10 days left before open enrollment ends on Jan. 31 to buy insurance for 2017 without risking what — at this point — would be a penalty at tax time.
