The only question is how much it will weaken the ACA and hurt insurers.
The messy saga of the Affordable Care Act just got even messier.
President Donald Trump on Thursday signed an executive order aiming to make it easier for Americans to buy skimpier and cheaper health insurance. The order isn’t as aggressive as it might have been in undermining the ACA, but that’s scant reassurance for insurers, who face an administration that seems actively hostile to a law it’s supposed to enforce.
The order aims to let association health plans — groups of small employers banding together to buy insurance — offer coverage throughout the U.S. Insurers consistently oppose selling health insurance across state lines because of varying regulations. If plans are permitted to cross state borders, then insurers fear a regulatory race to the bottom, where cheaper and less-comprehensive plans from states with lax rules would attract the healthiest patients, leaving insurers in more-regulated states with a sick and expensive group of enrollees.
Insurers like Anthem inc. have pruned back their participation in the ACA to states where they feel safe. This order could shake up even those stable markets where the ACA is doing relatively well.
Allowing insurance sales across state lines may not make much of a difference. Insurance plans need a network of health-care providers in places wherever they offer insurance, and that’s difficult to create from scratch in a new state. But anything that makes state markets less predictable is a negative for insurers.
Trump’s order has the potential to siphon young and healthy patients from the ACA’s individual insurance markets to less-regulated plans and to raise premiums for sicker Americans, even if everyone stays within state borders. It instructs federal agencies to work to expand access to cheaper insurance that skirts the ACA’s regulations, both through association plans as well as skimpy, short-term insurance plans. Tennessee, where people can already sign up for cheaper association plans, has one of the sickest ACA marketplace populations.
A number of questions remain. An outline of the order suggests access to looser association plans may be limited to employers. But if self-employed individuals can sign up — an option the administration says it’s still considering — then it will be far more damaging to the individual market.
It’s also unclear whether people who purchase cheap, short-term insurance will be able to skirt the ACA’s individual mandate. If they can, then those plans will likely be substantially more popular. And it’s unclear how much power states will have to regulate such plans.
But even in mild form, these efforts will damage an already fragile market over time. And the uncertainty about these questions will have insurers running scared for the foreseeable future as agencies work on rules. Little about this administration suggests it will push for options that will make the ACA more functional.