On Oct. 12, 2017, President Trump signed an executive order intended to change certain rules under the Affordable Care Act (ACA). The order would expand access to association health plans, health reimbursement arrangements (HRAs) and short-term, limited-duration insurance. It doesn't change existing regulations, but directs federal agencies to consider new regulations or guidance to implement the order’s policies. The executive order directs many agencies, including the Department of Labor, to consider proposing rules or new guidance to loosen current restrictions on what are called “association health plans” and on selling low-cost, short-term insurance. Such rules potentially exempt those plans for a number of ACA requirements.
The executive order "is likely to have little effect on mid- to large-size employer-sponsored health benefits," said Chatrane Birbal, senior adviser, government relations at the Society for Human Resource Management. "Small employers may receive expanded ability to offer insurance to their employees through association health plans or have the ability to offer money through an HRA that employees can use to purchase health services."
"For most large employers and their employees, the executive order will result in no change in health coverage," agreed Steve Wojcik, vice president of public policy at the National Business Group on Health, an association of large employers.
The directive also instructs agencies to consider new regulations or guidance to:
- Permit the practice of providing a tax-free employer contribution through health reimbursement accounts that workers could use to buy individual market plans. The Obama administration had barred that practice. This adjustment might result in more employers dropping job-based coverage and simply giving workers money to buy their own plans.
- Report on steps federal and state governments could take to “increase choice and reduce consolidation” in the health care market. A senior administration official said Trump is concerned about the growing number of regions served by only one or two insurers or hospital systems.
Association health plans aren't new, they've already been in use for decades, though are frequently administratively burdensome and highly regulated, as many of these plans have had solvency problems and went bankrupt, leaving consumers on the hook with unpaid medical bills. However, Republicans want to make it easier for small businesses and individuals to band together to buy insurance through these types of plans and are counting on the regulatory agencies to create new rules doing just that. Remember, the President’s executive order does not make any immediate changes in the ACA. Instead, it merely directs regulatory agencies to issue new regulations on the matters.
On the same day, the White House also announced that it will no longer reimburse insurers for cost-sharing reductions made available to low-income individuals through the Exchanges under the ACA, effective immediately. Because Congress didn't pass an appropriation for this expense, the administration believes that it cannot lawfully pay the cost-sharing reductions. Premium tax credits, however, continue to be available.
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