Trump Says He'll Sign Order To Expand Health Insurance Options

Oct 10, 2017
Originally published on October 11, 2017 9:33 pm

President Trump is poised to sign an executive order that he says will make it easier for people to join together as a group and buy health insurance from any state.

The president tweeted about his plans on Tuesday morning.

"Since Congress can't get its act together on HealthCare, I will be using the power of the pen to give great HealthCare to many people — FAST," he wrote.

The order would direct government agencies with jurisdiction over health insurance to find ways to allow consumers and small businesses to create associations to buy health coverage, according to The Wall Street Journal, which cited an unnamed Trump administration official.

Proponents of the move say that association health plans, which could be offered by trade groups, chambers of commerce or groups of small businesses, would not be bound by Affordable Care Act regulations that require insurance policies to cover everyone, no matter their health status, and to cover a specific set of benefits.

Conservatives have long advocated for these kinds of plans because they say they will boost competition and lower premiums. Kentucky Sen. Rand Paul argued for them on NPR's All Things Considered in September.

"We believe that previous administrations have defined the law too narrowly, and under a new definition, there will be a wider expansion of AHPs, which will greatly lower costs to the consumer and provide more health insurance options," Rand's communications director Sergio Gor said in an email to NPR on Tuesday.

But health industry analysts say that if the policies don't have to follow ACA rules, they would likely draw healthier people out of the traditional insurance market with the lure of low-premium policies that offer few benefits. That would leave the Obamacare markets with a sicker, more expensive population and could drive their premiums higher.

"If the executive order is as expansive as it sounds and association plans are allowed to cherry-pick healthy people, it could truly cause the individual insurance market under the ACA to collapse, leaving people with pre-existing conditions without access to affordable coverage," says Larry Levitt, senior vice president of the Kaiser Family Foundation.

But he says exempting insurance plans from the ACA rules through regulation would be difficult.

"They would have to twist current laws into a pretzel to allow both individuals and small businesses to get insurance through associations exempt from the ACA's rules and operating across state lines," Levitt says.

Joseph Antos, a health policy scholar at the conservative American Enterprise Institute, agrees. "Trying to exempt these new associations from ACA rules that apply to all other plans doesn't strike me as something that's going to stand up in federal court," Antos says.

Insurance markets are defined by local populations and local hospital networks, Antos says. There's no reason to believe that an association of people spread across many states would be able to negotiate better deals with health care providers than insurance companies already do.

Health insurers have long opposed the idea, saying it will drive premiums higher for many consumers. "Association health plans would fragment and destabilize the small group market, resulting in higher premiums for many small businesses," the National Association of Insurance Commissioners said in a position paper on its website.

Insurance premiums are based on the health status of the people who are included in the group being covered. Under the Affordable Care Act, those groups are defined by geography — everyone of the same age group in the same region pays the same premium for similar coverage.

Allowing some people to pull out of that group and buy less generous insurance could split the market between healthy people who don't need much care and sicker people who use more. And that would drive up costs for those sicker people.

But Trump has long said the cost of insurance has risen too much under the ACA and that he wants to see people have more choices, including the choice to buy insurance with fewer benefits.

The order, which is expected later this week, would begin to fulfill Trump's promise during his campaign to allow people to buy insurance "across state lines," a goal that many conservatives say will boost competition. Insurance markets are currently regulated at the state level, and consumers can only buy policies that are approved in their state.

Trump said in the Oval Office on Tuesday that he'll be "signing something probably this week that's going to go a long way to be able to help a lot of the people who have been hurt on the health care. "They'll be able to buy, they'll be able to cross state lines and they'll get great competitive health care and it will cost the United States nothing," the president said.

Antos of AEI disagrees.

"I don't see any real impact here."

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President Trump is planning to issue an executive order tomorrow that he says will inject more competition into health insurance markets. The goal is to make it easier for people and small businesses to band together and buy insurance, presumably at lower rates. But the new policies they buy might not offer the benefits and protections consumers have become used to under the Affordable Care Act. And, as NPR's Alison Kodjak reports, Trump's move could end up making insurance coverage cheaper for healthy people while driving prices much higher for those who need care.


TRACY: Hi. I'm Tracy. Welcome to Farm Bureau Health Plans.

ALISON KODJAK, BYLINE: If you live in Nashville, you can get a health insurance policy from the Tennessee Farm Bureau for a hundred dollars a month.


TRACY: One of the most common questions we get asked - how do we keep our rates so low?

KODJAK: And it's a good question. The Farm Bureau offers four health plans for under $200. The cheapest plan on the Obamacare exchange is about $350 a month. So what's the Farm Bureau's secret? They can offer stripped-down policies with high deductibles only to healthy people. The hundred-dollar-a-month plan has a $5,000 deductible. It pays for 80 percent of the cost of doctor visits, tests and prescriptions, but it doesn't cover pre-existing conditions, and it doesn't comply with the rules of the Affordable Care Act. That means people who buy these plans have to pay a penalty to the IRS. Kevin Lucia says lots of people still want these policies. He's a professor at Georgetown University's Center for Health Insurance Reform.

KEVIN LUCIA: It may be worth it for some people because the premiums are low enough that they can combine both the premium and the penalty and still feel like they're getting ahead.

KODJAK: The policies are known as association health plans because they're sponsored by trade associations or business groups. And President Trump wants to see more of them. He's expected to sign an order that he says will make it easier for organizations like the Tennessee Farm Bureau to sell insurance across the country.


PRESIDENT DONALD TRUMP: And I'll also be signing something probably this week which is going to go a long way to take care of many of the people that have been so badly hurt on health care. And they'll be able to buy. They'll be able to cross state lines. And they will get great competitive health care, and it will cost the United States nothing.

KODJAK: According to reports on The Wall Street Journal and The New York Times, Trump will direct federal agencies to make it easier for associations to sell insurance to individual members and to small businesses in multiple states. The goal would be to release them from the Affordable Care Act's strict rules that govern what a health insurance policy has to cover.

DEBORAH CHOLLET: That would be hard to do.

KODJAK: That's Deborah Chollet, a senior fellow at Mathematica Policy Research. She says the law clearly defines the rules around insurance, and an order from Trump won't change that.

CHOLLET: With the Affordable Care Act in place, there is less logic to association health plans as a strategy to expand coverage and reduce costs.

KODJAK: The only way association plans work, she says, is if they can attract healthy people and leave sick people behind. Then those healthy people could pay less, but the cost for the sicker people left behind in traditional insurance plans would rise. And to make that happen, the new plans would likely have to shed some of the popular consumer protections in the ACA, like coverage for pre-existing conditions. Zack Cooper is a health economist at Yale University.

ZACK COOPER: Part of the reason we brought in essential benefits - so that the insurers couldn't sell products that, for example, didn't cover diabetes, which would then make it hard for people with diabetes to get coverage.

KODJAK: Cooper says this executive order and most of the other proposals designed to fix the health care system are missing the point.

COOPER: Ultimately the reason health insurance premiums are so high is because health care is so expensive.

KODJAK: And tinkering with the insurance markets, he says, amounts to just reshuffling the proverbial deck chairs on the Titanic. Alison Kodjak, NPR News, Washington.

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