This is an annotated copy of the executive order signed by president Trump October 12, 2017 likely affecting the markets for short term medical insurance, limited benefit medical insurance, association health plans, out-of-state insurance purchase, telemedicine and uninsured health plans (Health Savings Accounts, Health Reimbursement Arrangements, Flexible Spending Accounts, Section 125 cafeteria benefit plans. Portions of the executive order are highlighted and my comments are adding in blue type).
PROMOTING HEALTHCARE CHOICE AND COMPETITION ACROSS THE UNITED STATES
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1. Policy. (a) It shall be the policy of the executive branch, to the extent consistent with law (through HHS and IRS regulations for sure but it is uncertain what mechanism will be used to supercede state regulations currently prohibiting inter-state purchase of insurance), to facilitate the purchase of insurance across State lines (supercede state authority to control health insurance within its borders) and the development and operation of a healthcare system that provides high-quality care at affordable prices (consumers should be clear that price savings come from reducing the insurance coverage) for the American people. The Patient Protection and Affordable Care Act (PPACA), however, has severely limited the choice of healthcare options (through HHS regulations and tax penalties) available to many Americans and has produced large premium increases in many State individual markets for health insurance. The average exchange premium in the 39 States that are using www.healthcare.gov in 2017 is more than double the average overall individual market premium recorded in 2013 (but there is no expectation that this executive action will curb health insurance premium escalation, in fact we have just the opposite expectation This executive order, when implemented would have the obvious effect of increasing the inflation rate of traditional health insurance plan premiums). The PPACA has also largely failed to provide meaningful choice or competition between insurers, resulting in one-third of America’s counties having only one insurer offering coverage on their applicable government-run exchange in 2017. (The thing that drives competition and brings more product choices in health insurance is the opportunity for greater profit. ACA limits insurers’ opportunity for profit. We presume but do not know for sure that the new insurance plans that will come as a result of this executive order will have a higher profit margin for insurance companies than the current ACA-compliant plans).
(b) Among the myriad areas where current regulations limit choice (limiting the variety of health insurance through standardization of coverage was a stated goal of ACA) and competition, my Administration will prioritize three areas for improvement in the near term: association health plans (AHPs), short-term, limited-duration insurance (STLDI) (‘short term’ and then ‘limited duration’ is redundant. The commercial insurance market simply refers to ‘short term medical insurance’ or “STM’), and health reimbursement arrangements (HRAs). (These are three of the health plan specialties of my small business benefits consulting practice through Freedom Benefits. Each type has been restricted by federal law or regulation).
(i) Large employers often are able to obtain better terms on health insurance for their employees than small employers because of their larger pools of insurable individuals across which they can spread risk and administrative costs. Expanding access to AHPs can help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance. (This is a widely held belief but there is no evidence to support it. I’m not particularly optimistic that this will be anything more than an additional marketing vehicle). Expanding access to AHPs will also allow more small businesses to avoid many of the PPACA’s costly requirements (it is not clear whether the AHPs will be exempt from minimum essential coverage that beneficiaries enjoy but drives up the cost. We suspect that these plans will be offered without full coverage for things like maternity benefits and mental health coverage). Expanding access to AHPs would provide more affordable health insurance options to many Americans, including hourly wage earners, farmers, and the employees of small businesses and entrepreneurs that fuel economic growth.
(ii) STLDI is exempt from the onerous and expensive insurance mandates and regulations included in title I of the PPACA. This can make it an appealing and affordable alternative to government-run exchanges for many people without coverage available to them through their workplaces. The previous administration took steps to restrict access to this market by reducing the allowable coverage period from less than 12 months to less than 3 months and by preventing any extensions selected by the policyholder beyond 3 months of total coverage.
(iii) HRAs are tax-advantaged, account-based (this is a term likely to be misunderstood. The ‘accounts’ are notional accounts completely within the employer’s accounting system, not an account like a bank account) arrangements that employers can establish for employees to give employees more flexibility and choices regarding their healthcare. Expanding the flexibility and use of HRAs would provide many Americans, including employees who work at small businesses, with more options for financing their healthcare. (ABSOLUTELY!)
(c) My Administration will also continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system. To the extent consistent with law, government rules and guidelines affecting the United States healthcare system should:
(i) expand the availability of and access to alternatives to expensive, mandate-laden PPACA insurance (aka ‘limited benefit’ or ‘mini-med’ insurance) , including AHPs, STLDI, and HRAs;
(ii) re-inject competition into healthcare markets by lowering barriers to entry (fewer regulatory hurdles and faster approvals for new association insurance products?), limiting excessive consolidation, and preventing abuses of market power; and
(iii) 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 (I haven’t read anything specifically about this provision).
Sec. 2. Expanded Access to Association Health Plans. Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance (it is not yet clear whether these regulations will allow for specific cost-reducing features like reduced coverage, eligibility requirements or medical underwriting, non-renewability, etc.), consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality‑of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry. (Insurance companies are working on this already and will be ready to introduce products to healthy individuals ASAP).
Sec. 3. Expanded Availability of Short-Term, Limited‑Duration Insurance. Within 60 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such insurance to cover longer periods and be renewed by the consumer. (Right now this coverage is only available in about 34 states and is subject to restrictive laws. I expect rapid expansion of products and acceptance by healthy young consumers. This insurance usually does not cover many common items like prescription drugs and does not cover the cost of treating pre-existing medical conditions).
Sec. 4. Expanded Availability and Permitted Use of Health Reimbursement Arrangements. Within 120 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, 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. (This is my specialty: developing custom HRA plans and claim administration systems, integrating transactions with payroll for tax compliance, and communicating with employees. We will likely see new service providers enter this field).
Sec. 5. Public Comment. The Secretaries shall consider and evaluate public comments on any regulations proposed under sections 2 through 4 of this order. (The primary expected public resistance is that this order will have the effect of “skimming” younger healthier people from current ACA-compliant health insurance plans and thereby raising insurance rates for less healthy people. Others object to the expansion of trimmed down commercial insurance in general because this industry has a troubled history of perceived abuse).
Sec. 6. Reports. Within 180 days of the date of this order, and every 2 years thereafter, the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor and the Federal Trade Commission, shall provide a report to the President that:
(a) details the extent to which existing State and Federal laws, regulations, guidance, requirements, and policies fail to conform to the policies set forth in section 1 of this order; (I presume this will include some concern over lack of authority to override state insurance laws) and
(b) identifies actions that States or the Federal Government could take in furtherance of the policies set forth in section 1 of this order (this would lead to the real meaningful effect of this executive order and an admission that the order will have little immediate impact).
Sec. 7. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person (yet may create a liability for the federal government. We should look for groups that may sue in the future over damages in the form of higher premium rates for traditional health plans after implementation of this order).
DONALD J. TRUMP
THE WHITE HOUSE,
October 12, 2017.