When dealing with President Donald Trump, it is always important to separate what actually matters from what doesn’t. Yesterday, a high-profile executive order to undermine the individual-health-insurance-market framework of the Affordable Care Act was more of a statement of aspirations than an immediate threat. Meanwhile, Trump put into motion a much more direct, unilateral act of sabotage
First, let’s look at that executive order. We’ve become so dazzled by the Trump Show theory of politics, where every statement or tweet can move mountains, that we assume everything he does has world-historical importance. But, in general, Congress makes laws, not the president with one stroke of a pen. The executive order states that it’s the policy of the Trump administration to create a high-quality, affordable health-care system, which Republicans have been trying to come up with for seven years. But Trump has a few actual ideas.
He wants to expand “association health plans,” where small businesses band together to obtain better deals on health insurance, and short-term insurance, a catastrophic-style policy that people in job transition can currently access for up to three months. Both of these alternatives are not subject to many of the ACA’s minimum-benefit requirements.
Association health plans, under the Trump order, would be considered large employers, subject mostly to state regulations—and if the association included multiple states, it could pick which state’s laws to follow (i.e., the one with the least regulations). This would certainly create a race to the bottom, like we have in the credit-card industry, where association health plans that offer benefits from the most deregulated state fan out across the country.
Short-term insurance is not subject to ACA benefit-mandates at all. Trump wants to increase the duration of that insurance from three to 12 months and make it renewable, so that it becomes more of an everyday option than a stopgap. There’s also a nod to health-reimbursement arrangements, flexible-spending accounts employers can offer so people can use pretax dollars to pay medical expenses. Trump wants to open those up to anyone.
The expected effect would be for healthier people to jump out of ACA markets, making risk pools sicker. Insurers would react by accelerating cost increases in those plans, or possibly bugging out, crushing the insurance exchanges.
But the operative word is “wants.” What the executive order actually says is that cabinet officials “shall consider proposing regulations” on these options, “consistent with law.” It doesn’t even specify what should be done with those regulations, just that they should be expanded in some way. There’s not even a guarantee that individuals would be able to buy into the association health plans, which would be the most direct way to attack the exchanges.