State Attorneys General Ask Court For Injunction Reversing CSR Payment Halt

http://healthaffairs.org/blog/2017/10/18/state-attorneys-general-ask-appellate-court-for-injunction-reversing-csr-payment-halt/

On October 18, 2017, the attorneys general of eighteen states and the District of Columbia asked the United States District Court for the Northern District of California for a temporary restraining order and order to show cause why a preliminary injunction should not issue to compel the Trump administration to continue making cost-sharing reduction (CSR) payments until the lawsuit they have filed is resolved. The motion asks the court to make a decision by 4:00 PM tomorow, October 19, as the next cost-sharing reduction payment is due on October 20. The plaintiffs ask for a nationwide injunction as the issue it addresses is nationwide in scope.

The motion is supported by a legal memorandum and numerous affidavits. To obtain preliminary relief, a plaintiff “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” In the Ninth Circuit, where California is located, it is enough to show that serious legal questions are presented if the balance of hardships tips sharply in the plaintiff’s favor.

The brief begins by explaining the purpose of the Affordable Care Act’s cost-sharing reductions: making health care affordable to lower-income individuals enrolled in silver marketplace plans by reducing out-of-pocket limits, deductibles, and other cost-sharing. It notes that insurers are required to reduce cost sharing for eligible individuals and that they are doing so to the tune of $7 billion for 2017. The ACA requires the federal government to reimburse insurers for these costs and up until September of 2017—including eight months of the Trump administration—it did so. Only days before the October payment was to be made, and less than three weeks before open enrollment began for 2018, the administration cut off the payments.

The states argue that Congress has in fact appropriated funds to cover the cost sharing reduction reimbursement payments. It is undisputed that Congress appropriated in the ACA funds for the premium tax credits and, the states argue, this appropriation covers the CSRs payments as well. They base their argument on the text, structure, and design of the ACA. This argument was rejected by the lower court in the House of Representatives’ lawsuit, but that decision is not binding on any other federal court and the states’ argument has never been ruled on by a federal appellate court.

The states further argue that the executive branch’s sudden termination of the CSR payments was “arbitrary and capricious” and thus prohibited by the Administrative Procedures Act. They contend that President Trump has violated his constitutional duty to “take care that the laws be faithfully executed.” The brief quotes liberally from President Trump’s tweets, in which he claimed, “The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”; bragged that the ACA “is being dismantled, but in the meantime, premiums & deductibles are way up!” while health insurance stocks plunge because of his Executive action; and boasted that he had “knocked out the CSRs,” pronouncing the ACA “dead,” “finished,” and “gone.” The brief describes the President as “characteristically frank” in detailing his motives for cutting off the payments, which do not rely on legal analysis.

The brief describes in detail, with frequent cites to affidavits filed with the brief, the harm that the states and their residents will suffer because of the administration’s decision. These include destabilizing the states’ individual health insurance markets, increasing premiums, decreasing consumer plan choices, and suppressing market participation. The decision will also, the states assert, increase the number of uninsured individuals in the states and thus their uncompensated care costs. The brief notes that the District of Columbia Court of Appeals already recognized these burdens on the states when it granted them the right to intervene in the appeal of the case brought by the House of Representatives. The brief contends that the timing of the decision to terminate the CSR payments will cause consumer confusion and cause insurers to absorb multi-million dollar losses, further destabilizing the individual market.

Finally, the brief argues that the balance of the hardships tilts toward the plaintiff states. In particular, as has been noted by the Congressional Budget Office and others, terminating the CSR payments will cost the government more than it saves since it will increase premiums and thus premium tax credits. An injunction is also, the states note, necessary to preserve the status quo until the court can rule on the legal issues in the case.

The President’s Executive Order: Less Than Meets The Eye?

http://healthaffairs.org/blog/2017/10/20/the-presidents-executive-order-less-than-meets-the-eye/

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The executive order (EO) signed by President Donald Trump on October 12 directs the Departments of Health and Human Services (HHS), Labor, and Treasury to develop federal regulations that could allow new and less expensive health insurance options for employers and consumers.

The EO marks a shift in the administration’s strategy on health care. After failing to get legislation through Congress to repeal and replace the Affordable Care Act (ACA), the administration is now attempting to move away from the ACA’s heavily-regulated markets through changes that can be implemented without a change in the law.

The executive order does not itself change any federal regulations. Instead, it sets into motion a policy development process that could lead to new regulations or regulatory guidance within the confines of current law. Although the EO gives general policy direction, the specific content of future regulations depends on legal and technical analysis to be conducted by the agencies.

The policy themes are familiar: expand access to lower-cost insurance outside of the ACA’s exchange mechanism and enhance the use of financing vehicles to help workers pay for their care. The extent of possible changes is limited. For example, the EO seeks to allow the sale of insurance across state lines, but relies on potentially expanding the ability of employers to form Association Health Plans (AHPs) under the Employee Retirement Income Security Act (ERISA). Individuals purchasing their own insurance would continue to be subject to federal and state insurance market rules.

An Uncertain And Potentially Lengthy Timeline

The timeline for producing rule changes is uncertain. The EO gives the agencies 60 days to “consider proposing regulations or revising guidance” without specifying the date when a proposed rule would be released. It typically takes months, and sometimes years, to put a new federal regulation into effect.

The Administrative Procedures Act specifies that agencies must follow an open public process when they issue regulations. Following an often-lengthy internal clearance process, a proposed rule is issued that invites public comments. The final rule taking those comments into consideration must be developed and cleared before publication. Less time is required if an agency determines that it can issue an interim final rule without first publishing a proposed rule. Interim final rules generally take effect immediately.

Even if the federal agencies move expeditiously, it is unlikely that new regulations could affect the marketplace for health insurance in 2018. ACA exchange plans have been finalized in time for this year’s open enrollment period, starting November 1. Most employers will have signed contracts for their insurance plans for next year well before the end of 2017 as well. Most Americans will be required to select next year’s coverage before the end of this year. Realistically, any new rules are likely to be effective starting in 2019 or later.

Major Policy Areas

The EO targets three policy areas for change.

Association Health Plans (AHPs)

Republicans have long supported the use of AHPs to give small employers some of the advantages that large employers have in purchasing insurance for their workers. AHPs potentially could allow small firms to operate as one large employer plan, giving them scale economies and greater market power than they have purchasing insurance as separate companies. In addition, AHPs could be exempted from some of the ACA’s requirements (including essential health benefits and community-rated premiums). However, as the law is now interpreted, AHPs are subject to the same state and federal regulations that apply to the small group and individual insurance markets, largely eliminating their usefulness.

The EO directs the Labor Department, which oversees the regulation of employer plans, to look for ways to make it easier for small businesses to join AHPs. The existing rules for multi-employer insurance plans are complex, but it may be possible that ERISA could be reinterpreted to make AHPs more effective and attractive than they are today. The EO raises the possibility that AHPs could be formed among employers operating in the same geographic area or industry. Details may not be available for some time.

Whatever changes are pursued will be heavily scrutinized and likely challenged in court. Insurers selling in ACA-regulated markets might oppose the new regulations if they expect AHPs to attract healthier individuals from more comprehensive (and more expensive) exchange plans.

It is not clear that AHPs would be a better option for small employers than they have today. Forming larger groups can help spread insurance risk and administrative costs. Larger plans can also use their leverage to push better managed care protocols into their insurance plans, and thus cut costs. However, the voluntary nature of AHPs could result in plans competing for healthier groups of workers rather than investing the resources necessary to make health care more efficient and effective.

Small employers may have the option of joining more than one AHP or staying in the regulated market. Competing AHPs might structure their coverage to attract firms with younger, healthier workers. The press statement accompanying the EO states that employers would not be allowed to discriminate among workers based on their health status. But small employers would not be forced to join AHPs, and the rules for joining might be written in ways that implicitly and subtly target firms with healthier workers.

AHPs could add value to the health system if they moved people out of expensive, unmanaged fee-for-service insurance with high administrative costs into better-run managed care plans that cut expenses through economies of scale and elimination of unnecessary use of services. The Trump administration might find a way within current law to make these kinds of AHPs available without shifting higher premiums onto less healthy workers. But the history of AHPs and related types of organizations is not promising. Many previous multi-employer plans have suffered from undercapitalization, and have gone insolvent. It will not be easy to secure the necessary capital to build a viable AHP in a market in which small employers may have several insurance options.

Short-Term, Limited Duration Insurance (STLDI)

Short-term health insurance policies offer coverage to individuals who are unable to obtain other forms of health insurance but want to be protected for a specific period of time. STDLI plans are not subject to the ACA’s insurance rules. They do not have to cover the ACA’s essential health benefits, they do not cover pre-existing conditions, and they are not required to cover people in poor health. One study found that STDLI plans are one-third the price of exchange plans. These plans have generally been viewed as niche products, sold primarily to people who are between jobs.

The EO calls on HHS, Labor, and Treasury to reverse decisions of the Obama administration that restricted the availability of STLDI plans. A regulation issued on October 31, 2016 limits their duration to no more than three months, and the plans are not renewable. Moreover, enrollment in an STLDI plan does not constitute coverage under the ACA’s individual mandate. It seems likely that the agencies have the authority under current law to allow STLDI plans to cover an individual for up to one year and to be renewable.

STLDI plans are clearly not for everyone but could prove attractive to some customers. Low-cost coverage should be made available to individuals who change jobs and those who are unable to buy exchange coverage after the open season has ended. Consumers enrolled in STLDI plans who develop a serious medical condition would probably not be able to renew their coverage but would have access to higher-premium plans offered on the ACA-regulated marketplace.

An open question is whether the Trump administration will also attempt to exempt STLDI enrollees from the individual mandate’s tax penalties. That would make short-term plans more attractive for healthy people and thus exacerbate the adverse selection that is already driving up premiums for ACA-compliant plans.

Health Reimbursement Arrangements (HRAs)

HRAs allow employers to reimburse workers for their families’ medical expenses, including deductibles and other cost-sharing payments and health items not covered by insurance. Unlike health savings accounts, workers do not contribute to HRAs. Payments made by an employer through an HRA are not treated as taxable income for the worker. The Obama administration required HRAs to be used solely in conjunction with ACA-compliant health plans.

The EO directs the agencies to propose ways to expand the availability and use of HRAs. The EO specifically states an intention to allow HRAs to be used for workers purchasing their own non-group coverage. The administration may be planning to allow HRA funds to be used to pay premiums and cost-sharing in the individual insurance market, including plans that are not ACA-compliant. Those plans might include AHP plans and STDLI, depending on other regulatory changes that might result from the EO.

For some small employers, an expanded role for HRAs may be an attractive way to help pay insurance premiums for their workers without sponsoring an insurance plan themselves. But it is far from clear how much authority there is under current law to make this kind of change. Moreover, even if the administration were able to create a larger role for HRAs, workers in small firms may not be eager to get their insurance through the ACA exchanges instead of through their place of work.

Premature Predictions

Several commentators have said that the Trump administration’s EO would result in risk segmentation that would drive up premiums and could eventually lead to dismantling the ACA exchanges. That prediction seems premature. AHPs as they exist today do not pose a threat to the ACA. It remains to be seen if the administration can make room for a viable AHP option, and whether or not that option will adversely affect the ACA exchanges. The STLDI plans are a niche market today. While it is possible their role could expand, their value is limited and attractive to only a small segment of the market. The administration’s vision for HRAs is not clear enough to predict how any changes would affect the existing ACA markets.

Each of the changes contemplated by the Trump EO would take time to put into effect. Once the rules are changed, the private sector would need to make investments to change their business practices. It is doubtful there would be a rapid transition.

Millions of consumers are enrolled in ACA-compliant plans today. The ACA exchanges face an elevated level of adverse selection. But those markets remain the only real game in town primarily because the ACA’s generous premium subsidies are only available through the exchanges. The President’s EO cannot change this reality. Whatever is done in response to the EO is likely to have a less dramatic effect on the market than some in the administration now hope, and others now fear.

 

Moody’s: Trump Executive Actions Credit Negative for HIX Insurers

http://www.healthleadersmedia.com/health-plans/moodys-trump-executive-actions-credit-negative-hix-insurers?spMailingID=12171449&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1261586415&spReportId=MTI2MTU4NjQxNQS2

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The investor-service company gauges impact of new ‘association’ health plans, expanded short-term insurance, and elimination of subsidies on the Obamacare exchanges.

President Donald Trump’s health-insurance executive actions last week are credit negative for insurance carriers operating on the Obamacare exchanges, New York, NY-based Moody’s Investors Service reported today.

On Oct. 12, Trump took two executive actions that will likely undermine the insurance exchanges established under the Patient Protection and Affordable Care Act (PPACA), Moody’s says:

  • In an executive order, the president eased regulations on “association” health plans and expanded the definition of short-term health insurance. The executive order calls for the federal departments of Labor, Treasury and Health and Human Services to expand insurance coverage for individuals such as allowing insurance purchases across state lines.
  • Although regulations must be put into place, association health plans will likely allow small businesses to band together to offer insurance to their employees. “Associations likely would be allowed to offer plans with lower benefits and lower costs,” Moody’s reported.
  • In a decision that did not require an executive order, Trump announced that his administration would end cost-sharing reduction (CSR) payments that subsidize the purchase of health insurance on the exchanges. The subsidies help insure low-income individuals who do not qualify for Medicaid coverage but can’t afford to buy commercial insurance health plans.
  • This year, the federal government spent about $7 billion on CSR payments.

The executive order is expected to promote creation of skimpy health plans, which would undermine the PPACA exchanges, Moody’s reported. “The introduction of lower-benefit, lower-cost plans and short-term insurance would be credit negative for health insurers that are still participating in the PPACA-governed individual market. These new plans would incentivize healthy people to exit the PPACA market, which would increase risk in the remaining pool of insureds.”

The decision to stop CSR payments will also have a credit negative effect on commercial carriers operating on the exchanges, Moody’s reported. This negative impact will fall particularly hard on commercial insurers that did not submit rates for next year based on the assumption that the CSR payments would be eliminated.

Health insurance rates are set on a state-by-state basis.

There could be an “offset” linked to the executive order that would soften the financial blow for commercial carriers operating on the exchanges, Moody’s reported. “If the executive order succeeds in bringing more healthy but currently uninsured people into the small group or individual market, that could mitigate at least some of the order’s negative effects.”

Moody’s highlighted the PPACA-exchange risk exposure of four commercial carriers in today’s report, which lists the companies’ beneficiaries on the exchanges as a percentage of their total number of health-insurance beneficiaries:

  • Indianapolis-based Anthem Inc.: 2.9%
  • Chicago-based Health Care Service Corporation: 6.8%
  • St. Louis-based Centene Corporation: 9.2%
  • Long Beach, CA-based Molina Healthcare Inc.: 20.4%

Trump Acting Solo: What You Need To Know About Changes To The Health Law

Trump Acting Solo: What You Need To Know About Changes To The Health Law

Apparently frustrated by Congress’ inability to “repeal and replace” the Affordable Care Act, President Donald Trump this week decided to take matters into his own hands.

Late Thursday evening, the White House announced it would cease key payments to insurers. Earlier on Thursday, Trump signed an executive order aimed at giving people who buy their own insurance easier access to different types of health plans that were limited under the ACA rules set by the Obama administration.

“This is promoting health care choice and competition all across the United States,” Trump said at the signing ceremony. “This is going to be something that millions and millions of people will be signing up for, and they’re going to be very happy.”

The subsidy payments, known as “cost-sharing reductions,” are payments to insurers to reimburse them for discounts they give policyholders with incomes under 250 percent of the federal poverty line, or about $30,000 in income a year for an individual. Those discounts shield these lower-income customers from out-of-pocket expenses, such as deductibles or copayments. These subsidies have been the subject of a lawsuit that is ongoing.

The cost-sharing reductions are separate from the tax credit subsidies that help millions of people pay their premiums. Those are not affected by Trump’s decision.

Some of Trump’s actions could have an immediate effect on the enrollment for 2018 ACA coverage that starts Nov. 1. Here are five things you should know.

1. The executive order does not make any immediate changes.

Technically, Trump ordered the departments of Labor, Health and Human Services and Treasury within 60 days to “consider proposing regulations or revising guidance, to the extent permitted by law,” on several different options for expanding the types of plans individuals and small businesses could purchase. Among his suggestions to the department are broadening rules to allow more small employers and other groups to form what are known as “association health plans” and to sell low-cost, short-term insurance. There is no guarantee, however, that any of these plans will be forthcoming. In any case, the process to make them available could take months.

2. The cost-sharing reduction changes ARE immediate but might not affect the people you expect.

Cutting off payments to insurers for the out-of-pocket discounts they provide to moderate-income policyholders does not mean those people will no longer get help. The law, and insurance company contracts with the federal government, require those discounts be granted.

That means insurance companies will have to figure out how to recover the money they were promised. They could raise premiums (and many are raising them already). For the majority of people who get the separate subsidies to help pay their premiums, those increases will be borne by the federal government. Those who will be hit hardest are the roughly 7.5 million people who buy their own individual insurance but earn too much to get federal premium help.

Insurers could also simply drop out of the ACA entirely. That would affect everyone in the individual market and could leave some counties with no insurer for next year. Insurers could also sue the government, and most experts think they would eventually win.

3. This could affect your insurance choices for next year. But it’s complicated.

The impact on your plan choices and premiums for next year will vary by state and insurer. For one thing, insurers have a loophole that allows them to get out of the contracts for 2018, given the change in federal payments. So, some might decide to bail. That could leave areas with fewer — or no — insurers. The Congressional Budget Office in August estimated that stopping the payments would leave about 5 percent of people who purchase their own coverage through the ACA marketplaces with no insurers in 2018.

For everyone else, the move would result in higher premiums, the CBO said, adding an average of about 20 percent. In some states, regulators have already allowed insurers to price those increases into their 2018 rates in anticipation that the payments would be halted by the Trump administration.

But how those increases are applied varies. In California, Idaho, Louisiana, Pennsylvania and South Carolina, for example, regulators had insurers load the costs only onto one type of plan: silver-level coverage. That’s because most people who buy silver plans also get a subsidy from the federal government to help pay their premium, and those subsidies rise along with the cost of a silver plan.

Consumers getting a premium subsidy, however, won’t see much increase in their out-of-pocket payments for the coverage. Consumers without premium subsidies will bear the additional costs if they stay in a silver plan. In those states, consumers may find a better deal in a different metal-band of insurance, including higher-level gold plans. Many states, however, allowed insurers to spread the expected increase across all levels of plans.

4. Congress could act.

Bipartisan negotiations have been renewed between Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to create legislation that would continue the cost-sharing subsidies and give states more flexibility to develop and sell less generous health care plans than those currently offered on the exchanges. Trump’s move to end the cost-sharing subsidies may bolster those discussions.

In a statement, Murray called Trump’s action to withdraw cost-sharing subsidies “reckless” but said she continues “to be optimistic about our negotiations and believe we can reach a deal quickly — and I urge Republican leaders in Congress to do the right thing for families this time by supporting our work.”

Trump on Friday urged Democrats to work with him to “make a deal” on health care. “Now, if the Democrats were smart, what they’d do is come and negotiate something where people could really get the kind of healthcare that they deserve, being citizens of our great country,” he said Friday afternoon.

Earlier Friday, Senate Minority Leader Chuck Schumer (D-N.Y.) did not sound as if he was in the mood to cut a deal.

“Republicans have been doing everything they can for the last ten months to inject instability into our health care system and to force collapse through sabotage,” he said in a statement. “Republicans in the House and Senate now own the health care system in this country from top to bottom, and their destructive actions, and the actions of the president, are going to fall on their backs. The American people see it, and they know full well which party is doing it.”

poll released Friday by the Kaiser Family Foundation shows that 71 percent of the public said they preferred that the Trump administration try to make the law work rather than to hasten replacement by encouraging its failure. The poll was conducted before Trump made his announcement about the subsidies. (Kaiser Health News is an editorially independent program of the foundation.)

5. Some states are suing, but the outcome is hard to guess.

Even though all states regulate their own insurance markets, states have limited options for dealing with Trump’s latest move. Eighteen states and the District of Columbia, led by New York and California, are suing the Trump administration to defend the cost-sharing subsidies. But it is unclear whether a federal court could say that the Trump administration is obligated to continue making the payments while that case is pending.

 

States have already tried Trump’s health care order. It went badly.

https://www.brookings.edu/blog/up-front/2017/10/13/states-have-already-tried-trumps-health-care-order-it-went-badly/?utm_campaign=Brookings%20Brief&utm_source=hs_email&utm_medium=email&utm_content=57417795

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Even after Republicans in Congress failed three times to rid themselves of the Affordable Care Act, President Trump has proved that there is no shortage of ideas for how to disrupt the health-care system.

Like many appealing ideas, this one, proposed by Sen. Rand Paul (R-Ky.), has hidden land mines that are already well-mapped out based on previous failed attempts to enact them, even in Paul’s home state of Kentucky.The president signed an executive order Thursday that will allow small employers to join associations of small business — such as farm bureaus or chambers of commerce — that provide health coverage to their members. If such associations self-insure, existing law might enable them to avoid both state insurance regulations and the core of the ACA. Thus, a simple turn of the regulatory dials could free up a large portion of the most heavily regulated parts of the health-insurance market.

A version of these self-insured association health plans first became widespread in the 1980s, but they failed in droves because many were undercapitalized. More troubling, these earlier association plans had a history of becoming what the Labor Department termed “scam artists” and the Government Accountability Office reported were “bogus entities [that] have exploited employers and individuals seeking affordable coverage.” More than two dozen states reported in 1992 that these early association plans had committed “fraud, embezzlement or other criminal law” violations.

We might avoid such a fate by requiring groups to register and meet adequate solvency and consumer-protection standards. But that doesn’t solve the more ominous aspect of association health plans: market destabilization.

Because less-regulated association health plans compete with fully regulated markets, actuaries and regulators have long warned that association plans create an uneven playing field that can disrupt markets. People who don’t need to cover preexisting conditions or don’t want to pay community rates gravitate to the better deals offered by associations, leaving sicker people in the regulated markets. Naturally, regulated insurance prices increase as a result, sometimes causing a death spiral that crashes the market.

We could avoid such market disruption by making association health plans abide by the same regulations that govern individuals and small groups, but the whole point of Trump’s executive order is to sidestep existing regulations. The only other option for avoiding market disruption is to keep association plans separate from the regular market by ensuring that people cannot simply choose between association plans and regulated insurance based solely on their health status.That’s just what happened in Kentucky in the 1990s when it reformed its individual market but exempted association plans from the reforms. Enrollment with associations shot up, and most insurers selling in the regulated market pulled out. Within two years, the state repealed its reforms. Association health plans were only one part of Kentucky’s failed market reforms, but they are still a major reason why the so-called Kentucky disaster now serves as a lesson for other states to avoid similar measures.

Employer groups avoid this kind of adverse selection because people can’t just pick an employer simply to get the health insurance they want. But many association health plans allow just that. You don’t need to be a farmer to join the Farm Bureau, and business associations can be open to any person that files a Schedule C tax form. Some groups have such skimpy fig leaves for membership qualification that they are criticized as “air breather” associations — that is, the only commonality among their members is their dependency on oxygen.

Federal and state law attempts to avoid this by exempting associations from insurance regulations only if they are “bona fide,” meaning that obtaining insurance is not the reason people join them. But as regulators will tell you, that criterion is not easy to enforce, which is why the hot potato of association “bona fides” is regularly tossed back and forth among states, insurers and the Labor Department .

Despite this troubled history, association health plans have an important place in, and alongside, regulated health-insurance markets. Still, their history counsels caution in freely expanding that role. These plans should succeed based on delivering superior value rather than serving as a vehicle to cherry-pick regulations they do and don’t want to follow. For that to happen, association health plans need a set of carefully considered rules based on lessons from the past, rather than naive belief in a quick fix.

Trump healthcare order could run afoul of retirement plan law

http://www.reuters.com/article/us-usa-healthcare-lawsuits-analysis/trump-healthcare-order-could-run-afoul-of-retirement-plan-law-idUSKBN1CH0DR

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President Donald Trump’s plan to make it easier for small businesses to band together and buy stripped-down health insurance plans could violate a federal law governing employee benefit plans and will almost certainly be challenged in court, legal experts said.

U.S. President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, U.S., October 11, 2017. REUTERS/Joshua Roberts

Trump signed an executive order on Thursday aimed at letting small businesses join nationwide associations for the purpose of buying large-group health plans that are not subject to coverage requirements of the Affordable Care Act, commonly known as Obamacare.

Industry experts said Trump’s order could ultimately enable such associations to purchase insurance from states with the fewest regulations. That would undermine Obamacare, former Democratic President Barack Obama’s signature healthcare law, which Republicans have failed to repeal.

Several healthcare and employment law experts said if Trump’s plan moves forward, states could argue the federal government had overstepped its authority in violation of the U.S. Employee Retirement Income Security Act (ERISA), a law that governs large-group plans.

In Thursday’s order, Trump asked the Department of Labor to propose rules that would allow more employers to participate in association health plans. Legal experts said lawsuits might not be brought until such regulations are issued.

Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms, said ERISA granted states the right to regulate association health plans.

Attorneys general could argue the federal government had overreached if the Trump administration winds up allowing associations to buy health coverage across borders that only complies with a single state’s regulations.

”Any attempt to allow the sale of association plans to small groups across state lines will be open to legal scrutiny as to whether it is violating ERISA and undermining state authority,” said Palanker.

‘PREPARED TO FIGHT’

A White House official said that “departments will be drafting rules in a way that minimizes litigation risk.”

The Department of Labor “will be reviewing ERISA in the course of following the President’s direction” in the order, the official said.

A number of state attorneys general from Democratic-leaning states said on Thursday they would fight any efforts to weaken Obamacare, which extended health insurance to 20 million Americans, but which Republicans call intrusive and ineffective.

“It should come as no surprise that California is prepared to fight in court to protect affordable healthcare for its people,” said Xavier Becerra, the state’s Democratic attorney general.

Legal experts said states may argue the associations formed for the purpose of buying insurance are not employers under ERISA.

Although ERISA allows associations to qualify as employers and manage large-group plans, federal regulators have generally required that members of such associations have a high degree of common interest beyond buying insurance, said Allison Hoffman, a professor at the University of Pennsylvania School of Law.

Trump’s order asks the secretary of labor, who enforces ERISA, to consider expanding the common-interest requirements to permit broader participation in association health plans.

SHORT-TERM PLANS

The idea of expanding association health plans across state lines has long been championed by Republican U.S. Senator Rand Paul, who made it a key plank of his own proposal to repeal and replace Obamacare. The Kentucky Republican was at Trump’s side when the president signed the executive order.

Paul’s proposal said ERISA was too restrictive in its definition of associations and that the law needed to be amended.

Thursday’s order also asked the Labor, Treasury and Health and Human Services Departments to look into expanding participation in cheaper, bare-bones, short-term limited-duration insurance plans, which are not subject to the ACA.

Timothy Jost, a professor at the Washington and Lee University School of Law, said such a move would face fewer legal hurdles than the expansion of association health plans.

The current three-month limitation on the use of such plans was a rule adopted by the Obama administration last year, so the Trump administration could roll it back through the normal rulemaking process.

Such plans are typically marketed to individuals who are between jobs or have a gap in coverage. They are much cheaper than ACA plans, but cover less and can exclude those with pre-existing conditions.

How Trump set up Obamacare to fail

https://www.vox.com/policy-and-politics/2017/10/11/16447504/obamacare-open-enrollment-trump-sabotage

All the ways the Trump administration has made it harder to sign up for health insurance this year.

President Trump hasn’t succeeded in repealing Obamacare yet. But his administration is doing its best to force the law to fail.

The most critical time of the year for the health care law is almost here: open enrollment, when millions of people log on to online marketplaces, check whether they qualify for federal subsidies to help them pay their premiums, and shop for plans. For the past three years, at least 10 million people have gotten insurance that way each year.

But this year, open enrollment is in the hands of a White House that’s openly hostile to the Affordable Care Act — and the Trump administration is taking advantage of the best opportunity it has to undercut the law.

President Trump has said that he wants Obamacare to implode, which he hopes would reignite the stalled congressional effort to repeal it. He isn’t just sitting around waiting for that to happen. His administration halved the length of open enrollment. They slashed spending on advertising and assistance programs. They pulled out of outreach events at the last minute.

The entire health care law could be at stake. Advertising and outreach are primarily targeted to younger and healthier people, who are essential to the law’s goal of affordable insurance coverage for all Americans. If their enrollment drops while older, sicker people keep signing up, premiums are going to increase even more next year.

It’s the start of a death spiral, a self-perpetuating cycle of price hikes and falling enrollment — which is exactly what Trump has said he wants.

“I think what this cumulative activity can do is start that death spiral,” Kathleen Sebelius, President Obama’s health and human services secretary during the ACA’s first open enrollment, told me.

Obamacare supporters are already conceding that as a result of these cuts, they likely won’t be able to match last year’s 12 million sign-ups. “I don’t actually think that’s possible anymore,” Lori Lodes, who worked on Obamacare enrollment in the Obama administration, told me.

We will know by December 15, the end of this year’s open enrollment period, how much the White House has succeeded in gutting Obamacare. By embracing this strategy, the Trump administration has put its political goals ahead of the millions of people who depend on the ACA for insurance.

“I really do think what they want to be able to do is come out on December 16 and say, ‘See, we told you Obamacare is imploding; it’s failing,’” Lodes said. “When the reality is they are going to be responsible because of the decisions they’ve made to undermine open enrollment.”

Open enrollment and outreach, explained

Every fall, the Obamacare insurance marketplaces open for business. People have a few weeks to log on, check out their options, and sign up for coverage. This year, sign-ups start on November 1 and close on December 15.

An entire apparatus exists to support open enrollment. Most states use the federal Healthcare.gov, while a few run their own marketplaces. The feds and some states run call centers, where people can talk to a real person to walk through enrollment. The federal government funds navigator and in-person assistance programs, which set up places where people can get help navigating the sign-up process.

Open enrollment hasn’t technically changed much this year, except it’s been shortened from 12 weeks to six. Otherwise, it’s pretty much the same. Healthcare.gov will still be open. People can still get tax subsidies and shop for coverage. All of the ACA’s regulations, such as protections for people with preexisting conditions and the requirement that insurers cover essential health benefits, remain in place.

But the mere need to clarify that, yes, Obamacare is still around is a big problem for open enrollment. After eight months of Republicans fighting to repeal it while claiming it’s failing, people like Lodes worry that many Americans think the law either is already gone or won’t be around for much longer.

Which is why outreach is so important.

The Obama administration went all out every year to promote open enrollment. President Obama appeared on late-night TV and viral online shows. The administration recruited celebrities to star in ads or highlight open enrollment on social media. Senior officials scrounged for as much money for the navigator program as they could find.

While things didn’t always go smoothly — the launch of Healthcare.gov was a disaster — the efforts helped 12 million people sign up for coverage in 2016. The uninsured rate has dropped to historic lows, and insurers have started to see improved business on the law’s marketplaces.

The key, Lodes said, was blanketing people with information — from television ads and email and text message reminders to working with community-based groups and churches. The biggest barrier was convincing people they could actually afford insurance, once the law’s financial assistance was accounted for.

Outreach works: The Huffington Post reportedrecently that an internal Health and Human Services Department report concluded that 37 percent of sign-ups in the last few months of 2016 could be attributed to outreach.

Trump administration officials have defended their outreach cuts in part by arguing that people are already familiar with Obamacare after three years. “I don’t think we can force people to sign up for a program,” a senior administration official told reporters in August.

But that runs counter to the available evidence. Nearly 40 percent of the US uninsured were still unaware of the marketplaces last year, and almost half did not know they might be eligible for financial assistance, according to surveys by the Commonwealth Fund.

“There is a difference knowing Obamacare is the law and knowing what you should do with that information,” Lodes said, “between knowing you need to sign up in this finite period of time or you do not get health coverage.”

The Obama administration had assumed that older people or people with preexisting conditions who struggled to get insurance before the ACA would be eager to sign up. So they focused their efforts on reaching younger people or people who hadn’t had insurance before. Every year, people turn 26 and roll off their parents’ health insurance, or maybe they get a new job with a higher salary and need to move from Medicaid to private insurance.

Every year, in other words, there are brand new customers for the ACA marketplaces.

“They’re either the least familiar or they are the healthiest. Either way, they either don’t know or don’t believe they need or want health insurance,” Sebelius said. “For somebody to suggest that there is no persuasion needed is just nuts.”

How Trump is sabotaging Obamacare enrollment

Because open enrollment is such a sprawling undertaking, the Trump administration has many tools at its disposal to undermine it and, by extension, the ACA. It seems to be using all of them.

The White House has some minimal requirements under federal law. It must perform outreach and education, it must run a call center, it must have a website where people can enroll, and it must operate a navigator program.

On paper, the Trump administration will do each of those things. But each is facing significant cuts. Together, they add up to a clear picture of an administration using every means available to drop support for ACA enrollment:

  1. Just a few weeks into the Trump administration, HHS announced it would reduce open enrollment from 12 weeks to six weeks.
  2. Trump has threatened since the spring to cut off federal payments to health insurers, driving up premiums and leaving some counties at risk of having no insurance options.
  3. Over the summer, Trump administration officials hinted they might not enforce the individual mandate.
  4. In August, HHS said it would cut funding for Obamacare advertising by 90 percent, from $100 million to $10 million.
  5. HHS also said it would cut funding for in-person assistance by 40 percent.
  6. A few weeks later, the department let the in-person assistance budget run out entirely without awarding more money.
  7. Late last month, the administration abruptly pulled out of state-level open enrollment events.
  8. HHS has cut off relationships with Latino groups that had worked with the Obama administration to enroll that population in coverage, Talking Points Memo has reported.

In other words, the Trump administration is cutting funding for outreach, cutting funding for enrollment assistance, and dropping out of partnerships to support enrollment, while shrinking the window for people to sign up for coverage, sowing doubts about whether people will be required to have insurance, and making threats that drive up premiums.

So as Trump claims Obamacare is failing, his administration is setting up a self-fulfilling prophecy.

Obamacare supporters are trying to fill the gaps with grassroots programs like the Get Covered campaign, run by former Obama administration officials. But they do not have the same resources as the federal government.

The ideal TV advertising campaign, for example, would cost about $15 million, said Lodes, who is helping to oversee Get Covered. They already know, with mere weeks left until open enrollment starts, that they will not be able to raise that kind of money, which means the hole left by the Trump administration cutting $90 million from the ACA’s advertising budget will go largely unfilled.

“There is no way that anything we do or anyone else does can fill the footprint of what the admin should be doing,” she said. “They were unable to get repeal passed through the Congress, so they really seem intent to do everything they can do to make sure open enrollment is not successful.”

Weak enrollment is a huge threat to Obamacare’s future

The inevitable result of the Trump administration’s actions will be fewer Americans with health insurance. Last year, 12 million people signed up for coverage through the Obamacare marketplaces. Nobody expects to match that number this year, after open enrollment has been so severely undermined.

“There is no doubt that the actions by the administration will mean that fewer people get covered,” Lodes said.

The number of uninsured Americans will likely tick up from its current historic lows. Hundreds of thousands or even millions will not be financially protected against a medical emergency, and it will be harder for them to afford the routine health care that prevents bigger problems later on. That will have a real effort on people’s lives and financial security.

But falling enrollment also threatens Obamacare’s future.

The law works when younger, healthier people and older, sicker people all sign up for coverage. Insurers need the low-cost patients to help cover the costs of the sicker ones, who are more likely to rack up big medical bills. The ACA has both sticks (the individual mandate) and carrots (cheaper premiums for young people and generous subsidies) to get everybody into the market.

But getting younger and healthier people takes a little more effort. They have been the focus of the outreach that Trump is now cutting.

People who have medical conditions already or who are older and know they may soon need insurance are going to find a way to enroll regardless. But young and healthy people are less likely to think they need insurance. They need some persuading that the ACA’s coverage will help them in an unlikely medical event and that they will be able to afford it, Sebelius and Lodes said.

“The last person to sign up is probably the healthiest person to sign up,” David Anderson, a former insurance industry official who now researches at Duke University, told me.

With a sicker pool left behind, health insurers are likely to either increase premiums even more next year or leave the market altogether. Plans have already cited the marketing cuts as one reason for increased premiums in 2018. And the higher premiums get, the more difficult it is to persuade young and healthy people to pay the price.

If sign-ups plummet — which even Obamacare supporters expect after the Trump administration has done so much to undermine open enrollment — the law’s future will be in serious peril.

“What that means over the long term is the health of the marketplace is at risk,” Lodes said.

No matter what the president says, Obamacare isn’t failing yet. But his administration is trying as hard as it can to make those words a reality.