President Donald Trump signed an executive order to follow through on his promise to allow insurance sales across state lines, which he said would give consumers more choices and drive down premiums.
Specifically, the order directs officials with the Departments of Treasury, Labor, and Health and Human Services to craft regulations that would allow trade associations to offer health plans that would be exempt from regulations of the Affordable Care Act (ACA). Trump was joined in a White House ceremony by Cabinet officers from those departments, Vice President Mike Pence, and Republican Senator Rand Paul of Kentucky, who had long advocated for the order.
“We’ve been hearing about the disaster of Obamacare for so long,” Trump said. “Premiums have skyrocketed. One-third of the counties have only a single insurer on the exchange.”
Trump’s call for allowing insurance sales across state lines was one of his earliest and most specific policy ideas—he called for this in the very first debate in the Republican primary, but it was largely overlooked. The idea is actually not new; for more than 20 years, the National Association of Insurance Commissioners has fought back efforts to allow health insurance sales outside regulation in the state where it is sold, saying this would cause a “race to the bottom” as groups would flock to states with the least restrictive regulations to file for coverage.
While these plans might save groups money in the short run, states have had experiences with associations called Multiple Employer Welfare Arrangements, many of which were lightly regulated and collapsed, leaving employers and employees without coverage.
The American Academy of Actuaries opposed the executive order, citing these earlier ventures. In a policy statement, the group said, “A key to sustainability of health insurance markets is that health plans competing to enroll the same participants must operate under the same rules.”
Advocates for fixing the ACA have expressed fears that the order would siphon healthier workers into lightly regulated, cheaper coverage, leaving self-employed workers and the sick on the exchanges, thus depleting the risk pool of the balance it needs. It is unclear whether the regulations that will follow will attempt to exempt association health plans from core ACA requirements like essential health benefits.
“The Trump Administration continues to do as much as possible to destabilize the American healthcare system, increase costs for families, and prevent people from accessing the care they need. Today’s executive order is the latest attack on our healthcare, following a long line of attempts to repeal and cripple the ACA,” said Sister Simone Campbell, SSS, executive director of NETWORK Lobby for Catholic Social Justice. “This executive order will drive up premiums for many—especially middle-class families and people with pre-existing conditions—to further undermine the ACA. It is morally reprehensible to hurt people through unjust policies for political gain.”
Trump, however, was motivated by his vow to dismantle the ACA, despite the failure of Congress to do so. He repeatedly cited encounters with voters and small business owners along the campaign trail, including a couple from Lake Charles, Louisiana. The president said the couple, owners of a small business, had once purchased coverage through an association but were not able to do so after the ACA took effect.
“Millions of Americans who want affordable options are just like them,” Trump said. “We will be happy to provide those options.”
The executive order
Allow for a broader interpretation of the Employee Retirement Income Security Act (ERISA) to let employers in the same line of business not in the same state to join groups to offer healthcare coverage to their employees. This could apply to new or existing groups.
Direct the Departments of Treasury, Labor, and HHS to expand coverage through low-cost, short-term limited duration insurance, which could help people between jobs or who missed an enrollment period.
Consider changes to make it easier for employers to make use of Health Reimbursment Agreements.