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Executive Action on the ACA

After Congress repeatedly failed to pass legislation to repeal and replace the Affordable Care Act (ACA), President Trump used the power of the executive branch to make two significant changes to the law, both of which could have a substantial impact on access to care.

First, President Trump signed an executive order that seeks to increase competition by facilitating access to association health plans (small businesses can join together to purchase insurance coverage through associations), short-term limited duration insurance products (plans that last less than a year), and health reimbursement arrangements (employers can give employees money to purchase insurance rather than provide it directly). Nothing is changing immediately; rather, President Trump has directed several government agencies to draft regulations to implement these new policies over the next 60 to 120 days. Experts disagree about whether and how these policies can be implemented via regulation, so it is not clear what the effects will be. Since association health plans and short-term insurance products do not need to follow a number of ACA patient protections, including the requirement for the essential health benefits, they could appeal to younger, healthier people who seek skimpier, less expensive coverage. This would raise costs for people who need comprehensive coverage.

Secondly, after months of threatening to do so, the Trump Administration announced its decision to end the cost-sharing reduction (CSR) payments to insurers. The CSR payments were set up as subsidies to insurance companies to help pay out-of-pocket costs for low-income individuals, available to people with incomes of 100 percent to 250 percent of the federal poverty level. Currently, about seven million people benefit from the CSR payments but the change could destabilize the marketplace and force insurers to drastically increase premiums, impacting millions of others not currently benefiting from these payments. In August, the Congressional Budget Office estimated that if the CSR payments were stopped, premiums would increase by 20 percent in the following year.

The move also put pressure on Congress to provide money for the CSR payments. Senator Lamar Alexander and Senator Patty Murray, the ranking Republican and Democrat on the Senate Health, Education, Labor, and Pensions (HELP) Committee, revealed bipartisan legislation that would allow for the subsidies to continue while allowing states more flexibility to waive some requirements of the ACA. Specifically, the legislation funds the CSR payments through 2019 and expands access to catastrophic plans, or copper plans. Currently, these plans are only available to individuals under the age of 30 or those who qualify for an economic hardship waiver but the new legislation would allow anyone to buy these plans, regardless of age or income level. Copper plans have very high deductibles but very low monthly premiums and those who purchase them are not eligible for tax credit subsidies. While President Trump originally expressed support for the legislation, he also indicated that he cannot support a federal bailout for insurers. Due to the mixed signals, it is unclear where the Administration stands on this bill.

All of this comes less than three weeks before the start of the open enrollment season for the ACA. ASH will continue to monitor this process and will send updates as necessary.