As anticipated, President Trump today signed an Executive Order that, once fully implemented, will give consumers new options for health insurance and expand employer-funder Health Reimbursement Arrangements (HRAs).
The executive action orders the Department of Labor (DOL) to look into ways of expanding Association Health Plans (AHPs) that can sell policies across state lines and not be subject to the stringent requirements of the Affordable Care Act (ACA). Association accounts can be formed by trade and professional associations or by community organizations. Before AHPs can become fully functional, however, regulations will need to be drawn up and public commentary periods held.
Today’s order also looks to expand the use of short-term health insurance plans, typically used by people between jobs. The Obama administration reduced the allowed duration of these policies from 364 days to three months, but Trump looks to restore the old standard. Since these policies are already being sold, insurance companies could quickly ramp up and expand coverage.
What makes both of these new options potentially much more affordable than policies sold on the ACA marketplaces is that they are not subject to the essential health benefits requirement of Obamacare.
Though these plans can skirt some of the costlier mandates of the ACA, they still must cover children up to age 26, cannot impose lifetime limits on covered benefits and cannot charge co-payments for preventive services like mammograms and colonoscopies. Worse, short-term plans do not satisfy the coverage requirements of the ACA, so those who purchase them will still be subject to an IRS tax penalty.
What Are HRAs?
Trump in his executive action also ordered the DOL, the Department of Health and Human Services (HHS) and the Treasury “to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.” HRAs are employer-funded and not taxable to the employees who use funds from them for health care purposes.
Critics of today’s initiatives warn that it is an attempt to sidestep and gut the ACA since healthy people will be lured to the lower-priced policies, leaving only the elderly and sickly — and those with generous federal subsidies — remaining on the Obamacare insurance exchanges.
But Trump cast his action in a positive light, saying: “The time has come to give Americans the freedom to purchase health insurance across state lines, which will create a truly competitive national marketplace that will bring costs way down and provide far better care.”
Finally, the order directs multiple agencies to review the level of competition among health-care providers and insurers nationally, with an eye toward identifying actions that could increase competition.