WASHINGTON -- President Trump signed an executive order Thursday allowing small businesses and trade groups to form associations and buy health policies sold outside their own states.
"This would open up additional options for employers to purchase the health plans their workers want ... The competition will be staggering. Insurance companies will be fighting to get every single person signed up and you will be hopefully negotiating, negotiating, negotiating and you'll get such low prices for such great care," said Trump during a press conference in the Oval Office.
He called the measure the first step in offering Americans "Obamacare relief."
The new order calls on the Secretary of Labor to consider ways to expand access to "association health plans" (AHPs), which enable individuals such as those with a common profession or interest to be counted as a large group and to buy plans across state lines.
With the Employment Retirement Income Security Act (ERISA) interpreted more broadly, employers in the same general business anywhere in the nation could team up to offer healthcare coverage to employees, by forming AHPs through "existing organizations" or newly created groups "for the express purpose of offering group insurance," a noted. AHPs also wouldn't be required to meet the Affordable Care Act's essential health benefit requirements.
“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,†noted the executive order.
Trump also directed the departments of Treasury, Labor, and Health and Human Services to look for ways to increase coverage through "short-term limited duration insurance" that sidesteps Obamacare mandates and regulations.
People who would benefit the most from such an option are those in counties with only one insurer on the exchange, the release said.
In addition, the order calls for changes in health reimbursement arrangements -- pre-tax, employer-paid dollars that employees can use to pay health expenses such as co-payments and deductibles.
Trump's action comes just weeks after Republicans in Congress failed to repeal the Affordable Care Act or even bring the most recent Graham-Cassidy repeal-and-replace bill to the floor for a vote.
Critics of the president's actions say it will gut consumer protections and bifurcate the individual market. Most view the measure as another attempt to undermine the Affordable Care Act exchanges and fulfill a campaign pledge.
Proponents, however, say it will increase competition and help those who don't receive subsidies on the exchanges access more affordable insurance.
On Thursday, Sen. Rand Paul, MD (R-Ky.), a vocal proponent of association health plans, penned an op-ed in explaining in greater detail how these new plans would work.
AHPs could benefit millions of people including low-income restaurant workers, he wrote. As an example, he suggested the National Restaurant Association could form a national AHP and use its size to squeeze insurers, thus reducing premiums.
Paul wrote that the action gives these individuals an "escape route to group insurance" which provide a similar type of "large group, cross-state ERISA" plan that "most employees love."
"Association Health Plans will be among the biggest free-market reforms of healthcare in a generation, and it will do more to counter the impact of Obamacare than most of the repeal bills did, because it will actually go after regulations that the legislation didn't touch due to Senate rules," he wrote.
Paul estimated that the plan would take six months to a year to implement.
"Long on propaganda. Short on details. Plenty of sabotage," tweeted Andy Slavitt, former acting administrator for the Centers for Medicare and Medicaid Services under President Obama, in response to the order.
Other policy experts were also critical.
"Association health plan ideas are about nothing more than rearranging the deck chairs on the Titanic because they only create a new risk pool designed to attract the youngest and healthiest out of the current state-run insurance pools ... Overall, there is no reduction in costs, only a shifting of costs from the healthiest to the sickest," said Robert Laszewski, of Health Policy and Strategy Associates in Alexandria, Virginia, in an email.
What Now?
“The executive order is the facilitating, signaling part of the process,†said Tom Miller, JD, of the American Enterprise Institute.
Even without the order, theoretically, some of the proposed ideas could have been implemented through rulemaking, he noted.
“The next steps are the hard part,†he said.
Agencies must still put out rules and regulations, explained Kavita Patel, MD, a practicing primary care internist at Johns Hopkins Medicine and a Brookings Institution nonresident fellow.
“We may see proposed regulations this year, but they have at least a 60-90 day rule process,†Patel, who served in the Obama administration as director of policy for the Office of Intergovernmental Affairs and Public Engagement at the White House, told 51˶.
Legal challenges could slow that process, she added.