Trump Issues Health Care Executive Order and Halts Related Subsidies

Published: October 19, 2017

HHSHealth CarePresident Trump

Last Thursday, President Trump took action to further thwart Obamacare by issuing an Executive Order to expand use of insurance pools and that same evening his administration announced that cost-sharing reduction payments would immediately be discontinued.

On Oct. 12th the president issued an Executive Order (EO) entitled Promoting Healthcare Choice and Competition Across the United States. The EO states that it will seek improvements in the following areas to expand choice and competition: association health plans (AHPs): short-term, limited-duration insurance (STLDI); and health reimbursement arrangements (HRAs).

The order seeks to use regulatory authority to

  • Expand the availability of, and access to, alternatives to Patient Protection and Affordable Care Act (PPACA) insurance, including AHPs, STLDI, and HRAs.
  • Re-inject competition into health care markets by lowering barriers to entry, limiting excessive consolidation, and preventing abuses of market power.
  • Improve access to and the quality of information that Americans need to make informed healthcare decisions, including data about healthcare prices and outcomes, while minimizing reporting burdens on affected plans, providers, or payers.

The EO directs the Secretary of Labor to propose regulations or revise guidance to expand access to health coverage by allowing more employers to form AHPs to promote their formation. The Secretaries of Treasury, Labor, and HHS are to propose regulations to expand the availability of STLDI and allowing such insurance to cover longer periods and be renewed by the consumer. These same secretaries are to consider proposing regulations or revising guidance to increase the usability of HRAs, to expand employers' ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.

The eventual impact of the EO is unclear at this point.  Uncertainty surrounds specific implementation dates or how market dynamics will change.

The EO plans to increase competition. “The competition will be staggering,” Trump stated on Thursday.  But according to a report by the National Conference of State Legislatures, six states are currently able to offer health plan sales across state lines, but no insurers are using the opportunity to sell across state lines.

In addition to the EO, HHS called a halt to Cost-Sharing Reduction (CSR) payments to insurers. The CSR payments, worth an estimated $7B in 2017, are intended to reduce out-of-pocket costs for low-income citizens on Obamacare.

Cutting the subsidies will likely further disturb the already unstable insurance market. The CBO has determined such a move would add more people to the ranks of the uninsured. Experts believe that cutting off the money to insurers would lead to a double-digit increase in premiums next year.

The subsidies are presently the subject of a federal lawsuit regarding whether the health care law properly approved them. The administration’s move to end them may generate more litigation from state attorneys general who assert the subsidies are fully authorized by the health care law.

Democrats believe that both the EO and the end to CSR payments will mean higher health care costs for working and middle class families.