FYI

As promised; two editorial opinions about Trump's Executive Order on ACA.

10/13/2017 WALL STREET JOURNAL- 

Fed up with failed attempts in Congress to repeal the Affordable Care Act, President Trump on Thursday took matters into his own hands, stopping payments to insurance companies and signing an executive order that could significantly damage the health insurance market and harm millions of people.

Mr. Trump carried out his threat to stop paying insurers to lower the out of pocket costs for low-income and middle-class Americans. The loss of this money, expected to be $9 billion next year, will force insurers to raise premiums and stop selling policies in some parts of the country. Because most people who buy coverage on A.C.A. exchanges also receive subsidies to keep their premiums affordable, this change would actually cost the government money — about $2.3 billion more next year, according to the Kaiser Family Foundation.

Earlier in the day, the president directed his administration to effectively create an alternative health insurance system that does not include the safeguards of the A.C.A. and could sabotage that 2010 law, one of his predecessor’s biggest accomplishments. The president claims that this will help people obtain cheaper insurance. In reality, it most likely will force insurance companies to abandon the A.C.A.’s insurance exchanges and ultimately precipitate a collapse of an important part of Obamacare.

The executive order is made up of two main changes: to expand the use of short-term insurance policies and to make it easier for professional and trade associations to sell health coverage to members across the country. Officials at the Departments of Health and Human Services, the Treasury and Labor will now come up with a rule after seeking public comment over the next several

Let’s start with short-term health policies. The Obama administration put in place rules that the policies could last 90 days and were not renewable. They’re currently meant for people between jobs. Mr. Trump is directing his aides to extend these plans and make them renewable, arguing that because these policies tend to be cheaper, this change could benefit millions of people. Short-term plans indeed cost less than yearlong policies, but that is because they are not as comprehensive. For example, many do not cover maternity care, cancer treatment or prescription drugs. And short-term policies often do not pay for treatment for pre-existing conditions, a signature requirement of Obamacare policies.

Mr. Trump also wants to expand the use of association health plans, which have been around for years but have a terrible track record. These plans typically work by insuring the employees of small and medium-size businesses that have something in common. A national plumbers association, say, might offer a plan to all of its members and their employees. These plans are lightly regulated by the federal government and often face little oversight by states because their beneficiaries are spread out across the country.

A 1992 General Accounting Office report found such plans had left nearly 400,000 members and their beneficiaries with $123 million in unpaid medical claims between 1988 and 1991. The Trump administration says it will require these plans to meet some of the requirements of the A.C.A., like protections for people with pre-existing conditions, but it has provided few details.

The combined effect of cutting off the insurance payments and the executive order will be to destabilize the A.C.A.’s individual market, which is used by nine million people to buy health insurance. Younger and healthier people will be tempted to buy a skimpy short-term policy with low premiums and switch to a policy that complies with the A.C.A. only when they need medical care. 

Knowing that they will no longer receive cost-sharing payments and that Obamacare policies will tend to attract older and sicker people, insurers will probably jack up premiums or withdraw altogether in sparsely populated counties.

State governments, public interest groups and others will seek to prevent some of the damage from the order. There is some hope that they will be able to shape the regulations during the public comment period. If the final rules are still harmful, some groups will most likely file lawsuits.

But Mr. Trump is determined to disrupt Obamacare. His administration has shortened the A.C.A. open enrollment period during which people can buy coverage for next year. Funding aimed at helping people enroll — like money for advertising and health navigators — has been slashed.

Congress must step in. Lawmakers need to finish work on much-talked about bipartisan legislation to strengthen the A.C.A., including by appropriating money for the cost-sharing payments. America’s long-term health depends on it.

New York Times 10/.13/2017  Mr.Trump's Obamacare Sabatoge

Republicans are still trying to defuse the ticking Obama Care bomb without blowing themselves up, and on Thursday the GOP cut the first wire: President Trump signed an executive order that could begin to revive private insurance markets. More to the point, Americans may start to have more choices at a lower cost.

One piece of this week’s order directs the Labor Department to “consider expanding access” to Association Health Plans, which would allow small businesses to team up to offer insurance. The purpose is to let trade groups form insurance risk pools across state lines and enjoy economies of scale. Many large companies are freed from state and some federal benefit mandates and operate under a law known as Erisa. Smaller businesses deserve similar flexibility.

More association plans might start to reverse the decline in small business coverage, and a White House fact sheet notes that the share of workers at small firms with employer coverage has dropped to about one-third in 2017 from almost half in 2010.

The order also seeks to expand the flexibility and use of health-reimbursement arrangements, which allow employers to pay back employees for health-care expenses with pretax dollars. This could be a step toward equalizing the tax treatment for smaller businesses that don’t offer coverage and thus don’t qualify for the subsidy known as the employer tax exclusion.

A third part of the order directs cabinet agencies to consider new rules on short-term insurance plans, which the Obama Administration restricted for the mortal sin of popularity. The plans traditionally could run for a year and often cover catastrophic events with relatively broad networks of doctors and hospitals. This can be a lifeline for folks between jobs.

But an Obama rule that took effect earlier this year limited the duration of the plans to 90 days. ObamaCare’s central planners hated that so many people were choosing the short-term options that can cost a third of standard plans. The Obama Administration said short-term plans don’t qualify as “minimum essential coverage” under ObamaCare, though it sure beats the risks of going without insurance.

The short-term market has historically been minuscule, but perhaps demand will be higher now given that average ObamaCare premiums have increased dramatically since 2013. One unknown is how many insurers will participate or what coverage will be included. Presumably the Administration will certify the plans as compliant with ObamaCare’s coverage mandate, though the executive order doesn’t say.

ObamaCare’s defenders are calling all of this “sabotage” and warning about “adverse selection,” in which a more robust individual market will siphon off the healthy customers that prop up

ObamaCare’s exchanges. They predict a death spiral of higher premiums for the sick or elderly left on the exchanges.

Yet the ObamaCare exchanges were deteriorating long before Mr. Trump arrived, as the young and healthy and insurers fled. Enrollment is 60% lower than the Congressional Budget Office predicted, which is impressive even by CBO’s record of missing the mark. Some 6.7 million people paid a tax in 2015 rather than buy coverage they don’t want or can’t afford.

If the small-plan and association markets grow enough, perhaps the exchanges could over time become high-risk pools that subsidize care for the sick, as the Juniper Research Group’s Chris Jacobs has suggested. What eludes the Socratic dialogues of Jimmy Kimmel is that the small percentage of Americans with pre-existing conditions need help paying for known problems, not unexpected events built into the price of insurance. This can be done without burying the costs across higher premiums for everyone, as ObamaCare does.

The downside of the executive order, and it’s considerable, is that these are all regulations that could be changed by, say, President Bernie Sanders. Reform by statute would be far more durable. So it was surprising to see Kentucky Senator Rand Paul all over cable-TV Thursday taking credit for the new rules after he did so much to scuttle ObamaCare repeal in Congress. He’ll need more than this for absolution.

The association-health plans in particular will require what the White House calls a “broader interpretation” of the Erisa law. Any legal judgment will await the fine print, but this is the kind of rule by regulation that will have to withstand inevitable court challenge.

The order’s practical effect thus won’t be known for months, though the agencies ought to move quickly to mitigate as much damage as possible in next year’s markets. The executive order isn’t the sabotage Democrats claim but neither is it the political salvation some Republicans hope. Republicans shouldn’t use these modest improvements as an excuse to avoid pushing more durable legislative reform.
Appeared in the October 13, 2017, print edition.