The mighty pen of Donald Trump strikes again.
Yesterday, the president signed an executive order on health care, the purpose of which is — according to Trump — to reshape the health care system in America. There are three main directives in the executive order: expand access to association health plans (which allow small industries to buy insurance as a collective); expand access to short-term health plans; and expand the use of health reimbursement accounts (which allow employers to set aside tax-free money to reimburse their employees’ health care costs).
This will undoubtedly give rise to a bevy of cheaper insurance policies; taken at face value, that certainly sounds like a good thing. But if we’ve learned anything over the past 9 months, it’s that what Trump claims an executive order will do very rarely aligns with the way that same order is executed. Trump can dress it up all he wants, but his executive order is little more than a thinly-veiled attempt to — yet again — dismantle the Affordable Care Act.
Here’s how.
The Order Eliminates Insurance Regulations
The regulations imposed on insurers were crucial to the ACA’s implementation. Under the ACA, insurers could no longer deny coverage (or make the premiums so high as to render them unaffordable) to individuals with pre-existing conditions. With Trump’s order, however, the insurance market would be far less regulated.
Take association health plans. They sound like a good idea in theory: individuals in a particular industry (farmers, for example) can band together and buy health insurance as a collective; the larger the group, the more favorable the rates will be. But as Vox explains:
“Before Obamacare, national associations could pick and choose which states’ insurance rules they wanted to follow and use those rules to guide the plans they offered nationwide. The bakers association could choose to follow the rules for, say, the Alabama insurance market, which mandates coverage of relatively few benefits, for all its bakeries in New York, a state with many mandates. The result was often health insurance that skirted state rules and was a better deal for businesses with young and healthy employees, who are likely to prefer skimpier health plans.”
In other words, the Affordable Care Act made it illegal for associations to pick and choose which rules to follow — rules that often saved the association money by sacrificing quality of coverage for the individual. Instead, associations had to cover all the essential health benefits (hospital care, maternity care, prescription drugs) mandated by law. Under Trump’s new plan, however, those regulations would be eliminated, meaning insurers could go back to offering bargain-bin plans that offer the illusion of coverage — an illusion that is often shattered as soon as an individual experiences a legitimate health crisis. It’s also worth noting that association health plans have a terrible track record both in terms of coverage and instances of fraud.
Short-Term Health Care Plans Are Unregulated
Once upon a time, short-term health care plans were an option for individuals who were anticipating a gap in their insurance coverage, typically due to job loss or retirement. Short-term health care policies work, in essence, like term life insurance: because they only cover a specific time period (which means the likelihood of your filing a claim is naturally lower), they’re cheaper.
However, these plans are also unregulated, which means they can pick and choose which medical benefits they will cover. The Obama administration recognized that some employers and individuals might use short-term health care plans as a workaround to getting actual health insurance; therefore, under the ACA, the maximum time limit for short-term health care plans was reduced to three months. Trump’s executive order would increase that time limit to one year.
The Executive Order Screws The Obamacare Market
Before the passage of the ACA, insurance companies offered cheap plans to healthy people (who are less likely to incur significant medical expenses). The problem with these plans was that they all but ignored individuals with existing medical conditions — the cheap plans wouldn’t cover what these individuals needed, and the plans that would cover them were unattainably expensive. As a result, sick people were faced with a choice: pay through the nose for insurance that would cover their needs, or go without.
The ACA was an attempt to level the playing field by mandating that everyone, healthy or not, receive equal access to the same plans with the same coverage. This, of course, meant that private insurance companies would see their costs rise as people who previously couldn’t afford insurance finally got the coverage they needed and saw a medical provider. To offset those costs, the ACA made a push for younger, healthy individuals to sign up for plans as well; those healthy patients wouldn’t need expensive medical services, which meant their premiums were effectively pure profit.
To further pad the insurance companies’ costs, the ACA also established “risk corridors” — short-term funds to help insurance companies with their new expenses. (Of course, the GOP defunded those risk corridors in 2014).
The reality is, the ACA only works when insurance companies are all required to abide by the same set of regulations. By imposing a baseline of what insurance companies ought to cover (and how much they could charge to do so), the ACA made health care a reality for people who might otherwise have never had the means to attain it. By eliminating these regulations and allowing fly-by-night insurance companies to flood the market, this executive order all but guarantees that healthy people will switch their plans, leaving the ACA-compliant insurance companies with only sick patients.
The result will be one of two outcomes: either insurance companies will re-price their plans to once again make comprehensive coverage unaffordable for the people who need it most, or the insurance companies will start to lose so much money that they will collapse. If the latter occurs, Republicans will jump all over it as proof that Obamacare doesn’t work, conveniently ignoring their role in causing its demise.
Trump, seemingly motivated by little more than pure spite towards his predecessor (and a healthy dose of ignorance on how health care works), is taking another whack at a law that has saved countless lives since its implementation. It seems Trump won’t rest until Obamacare is repealed. The millions of people who will die or lose coverage as a result don’t matter to him — he’s got political points to score.
