Trump health order skips Congress: Rate relief or destabilizing junk?

President Donald Trump said an executive order he signed Thursday represents the first step to give millions of people access to cheaper health plans, but Florida Democrats called it “sabotage” and a national consumer group blasted it as a move to promote “junk insurance” and destabilize markets.

Trump said Thursday “we are moving toward lower costs and more options in the health-care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.”

The executive order bypasses Congress, which has repeatedly failed to agree on an Affordable Care Act repeal or overhaul, and represents an attempt to guide health policy from the White House.

But it drew immediate criticism from ACA supporters.

“President Trump’s executive order today, which the White House called ‘the beginning of the unraveling of the ACA,’ is a brazen attempt to sabotage the Affordable Care Act,” said U.S. Rep. Ted Deutch, D-Boca Raton. “Like TrumpCare, these changes could destabilize the insurance markets and make comprehensive coverage more expensive for millions of Americans.”

The order instructs federal agencies to begin making rules to broaden options for small businesses and their employees to join associations that provide health coverage across state lines. Another part calls for rules allowing certain “short-term” health plans to stay in effect longer, and be renewable. A key question in both cases: Whether this lets the plans make an end run around key Obamacare regulations.

The rule-making process could take months, well into 2018. Depending on how these plans are treated under new rules, they could be exempt from requirements to offer “essential benefits” under the Affordable Care Act, analysts say. Such essential benefits include coverage for expectant mothers, emergency-room care and prescription drugs, and substance abuse and mental health treatment.

“If carried into action, the provisions of the executive order would likely siphon healthy people from the Affordable Care Act-compliant market, continuing a pattern of regulatory actions under the Trump administration that have undermined the ACA,” blogged Timothy Jost, emeritus professor at Washington and Lee University’s School of Law and a specialist in health law.

“Short-term policies in fact generally offer skimpy coverage,” Jost said.”They impose limits on coverage, omit benefits like mental health or maternity coverage, exclude coverage of preexisting conditions, and have higher out-of-pocket limits than ACA-compliant coverage. They also are very profitable to insurers who offer them, having much lower medical loss ratios than ACA-compliant coverage. Finally, they are cheap for people who qualify for them.”

That raises the prospect of new options and possible savings for healthy people who don’t have health coverage from big employers or Medicare. About 7 percent or so of more than 1 million Obamacare marketplace customers in Florida get no government subsidies based on income to keep costs down. They take the brunt of premium increases averaging 45 percent in Florida for 2018 marketplace plans — which Jost said is largely because of the Trump administration’s own actions such as reducing or threatening to withhold key funding — while 93 percent of customers see little change in what they pay out of pocket.

But the American Academy of Actuaries, the folks who help insurers set rates, warned of “far-reaching and unintended effects,” including “tilting the market in favor of entities with weaker benefits or solvency standards and weakening the protections for consumers with pre-existing health conditions.”

It’s bad news for the 3.1 million Floridians under age 65 with pre-existing health conditions, said Joseph F. Pennisi, executive director of the Lake Mary-based Florida Policy Institute, which calls itself a “common sense” think tank promoting general prosperity.

“Permitting the creation of ‘non-compliant’ markets would essentially result in two risk pools, one for healthier individuals and one for sicker residents,” Pennisi said. “If the executive order is implemented, premiums for ACA-compliant plans would rise sharply. This bodes poorly for those Floridians with pre-existing health conditions and other complex medical needs, who would face high premiums.”

Several advocacy groups opposed the plan.

“While this executive order claims to help improve consumers’ access to affordable care, it would have the exact opposite effect,” said Betsy Imholz, special projects director for Consumers Union. “Allowing insurers to sell substandard association health plans that aren’t required to cover basic services and benefits will further fragment and destabilize the insurance markets as a whole.”

As The Palm Beach Post reported, selling policies across state lines is already possible in a limited way under current law, but it faces certain practical hurdles. Insurance companies have increasingly narrow networks of health providers set up within each state. That often means plans in one state are not necessarily convenient or attractive to consumers in another.

Sen. Rand Paul, R-Ky., said the order is a step in the right direction at the White House Thursday.

“Today’s a big day,” Paul said. “President Trump is doing today what I believe is the biggest free-market reform of health care in a generation.”

It will allow “millions of people to get insurance across state lines at an inexpensive price,” Paul said.

Trump made his intentions known late this past month.

“We believe states are going to have a far bigger issue than insurance companies when it comes to this concept of selling across state lines, as each individual state has its own insurance commission that has a job to protect its own consumers,” Gordon F. Bailey III, vice president for Jacksonville-based Florida Blue, the state’s largest health insurer, said Sept. 28 in West Palm Beach.

A group representing Florida insurers signaled a willingness to explore the merits of the plan Thursday.

“Allowing health plans to offer innovative products and increasing lower cost options for businesses and individuals is not a bad thing,” said Audrey S. Brown, president of the Florida Association of Health Plans.

Florida’s Department of Financial Services “will continue to look deeper at the concept of inter-state insurance sales — and its possible impacts on Florida’s policyholders — as the specifics of President Trump’s plan come to light,” said spokeswoman Ashley Carr said in late September. “Florida has fashioned itself a leader in implementing insurance consumer protections, and we’d look to see that those protections remain in place.”

Trump’s move was applauded by Obamacare critics, including Americans for Limited Government president Rick Manning.

“President Trump has wisely asked the Department of Labor to examine the law and body of regulation to determine whether new regulations can be put into effect allowing for the sale of association health plans across state lines,” Manning said. “The great news is that this competition promises to allow more Americans more choices at an affordable cost, truly providing affordable health-care options, unlike Obamacare.”

Consumers Union’s Imholz sees it very differently: “Expanding the sale of these association health plans means the growth of junk insurance — coverage that may seem affordable to consumers but actually covers very little, potentially leaving them on the hook for huge out-of-pocket costs.”

She continued, “This is yet another action that undermines the good bipartisan efforts in the Senate to actually strengthen and stabilize the health insurance markets. Consumers deserve better.”

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