The ramifications of Trump’s health care executive order

Today, President Trump signed an executive order intended to loosen regulations currently enforced under the Affordable Care Act (ACA). The order specifically directs the Treasury and the Department of Labor to:

  • Expand rules for association health plans, allowing more employers to ban together and purchase healthcare plans, including plans across state lines;
  • Loosen regulations on and make available short-term limited duration insurance that’s not subject to the essential health benefits mandates of the ACA; and
  • Create rules that allow employees to use Health Reimbursement Arrangement (HRA) funds to pay for healthcare premiums

The order itself is very vague and limited in its language, but it’s important to understand that none of the order’s directives will have an immediate impact. The directives, which will be executed and implemented by the Treasury and the Department of Labor, are subject to the Administrative Procedures Act (APA), which means all action is required to go through a notice and comment period. 

As we saw with the ACA, creating or amending rules can be a lengthy process. Many of the rules under the ACA took a year or longer to be vetted and finalized. 

How will the executive order affect health care?

Some people are concerned the executive order will undercut or destabilize the individual markets by allowing health care plans to avoid the essential health benefits rules of the ACA. These plans would likely be cheaper than more comprehensive plans and may entice younger, healthier individuals away from entering the individual market of ACA-compliant plans. This could increase the risk of the individual market population and drive carriers either to raise premiums even higher, or to pull out of certain markets altogether. 

Until the Treasury and the Department of Labor develop more detailed rules and regulations, the actual impact of this executive order is difficult to project. Though the concern of destabilization is real. The order itself is clearly aimed at undermining key aspects of the ACA, but falls very short of what would be considered a full repeal and replace effort. Future repeal and replace efforts by Congress, or even bipartisan efforts at fixing the ACA, could also override or interfere with the order’s directives. 

While the rules of the executive order are unclear, we’ll continue to monitor the situation as it develops and help you identify the true impact.