Tag Archives: Presidential Executive Orders

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

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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

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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

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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.

Administration’s Ending Of Cost-Sharing Reduction Payments Likely To Roil Individual Markets

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http://healthaffairs.org/blog/2017/10/13/administrations-ending-of-cost-sharing-reduction-payments-likely-to-roil-individual-markets/

Yesterday, October 12, 2017, the White House press office announced that the administration will no longer be reimbursing insurers for the cost-sharing reductions they are legally required to make for low-income individuals. The Affordable Care Act requires insurers to reduce cost sharing for individuals who enroll in silver plans and have household incomes not exceeding 250 percent of the federal poverty level. These provisions reduce the out-of-pocket limit for these enrollees—particularly for those with incomes below 200 percent of poverty—and sharply reduce deductibles, coinsurance, and copayments. The reductions cost insurers around $7 billion a year currently.

The press secretary’s statement said:

Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare. In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments. The United States House of Representatives sued the previous administration in Federal court for making these payments without such an appropriation, and the court agreed that the payments were not lawful. The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.

Acting HHS Secretary Hargan and CMS Administrator Verma issued a similar statement:

It has been clear for many years that Obamacare is bad policy. It is also bad law. The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting—but never ultimately receiving—an appropriation from Congress as required by law. In 2014, the House of Representatives was forced to sue the previous Administration to stop this unconstitutional executive action. In 2016, a federal court ruled that the Administration had circumvented the appropriations process, and was unlawfully using unappropriated money to fund reimbursements due to insurers. After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution. Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.

The Legal Background

In fact, the ACA requires the federal government to reimburse insurers for these reductions. This is not a bailout. It is rather a statutory obligation of the federal government to pay insurers for services they have provided as required by law. In 2014, the House of Representatives sued the Obama administration in House v. Burwell (now House v. Price) claiming that the cost-sharing reduction (CSR) payments to insurers had never been appropriated by Congress and were thus illegal. A district court judge accepted this argument in the spring of 2016 and enjoined their payment, as President Trump’s statement says, but stayed her order pending appeal. The Obama administration appealed, arguing that there was in fact an appropriation. Until yesterday, the Trump administration had not taken a position on whether there was an appropriation or not.

The appeal is still pending, with the House and the Trump administration having agreed to stay the appeal several times. At the end of August, the D.C. Circuit Court of Appeals allowed 19 state attorneys general to intervene to protect their citizens. For more on the CSR backstory see here and here; for more on the intervention, see here; and for Health Affairs Blog posts on cost-sharing reduction payments, see here.

The Consequences Of Ending The CSR Payments

The effect of terminating the payments has been well analyzed, including a report from the Congressional Budget Office. It will drive up premiums as insurers attempt to cover the cost of the reductions. As premiums go up, so will premium tax credits. Indeed, the government will probably pay more in premium tax credits than it saves in cost-sharing reduction payments. Individuals who earn too much to receive tax credits will be particularly hard hit by the premium increases. Some of these could decide to pursue new forms of coverage that might be made available under the measures announced in President Trump’s October 12 executive order.

Ending the CSR payments could also drive some insurers out of the exchanges. Under their contract with the federal exchange, insurers may terminate participation if cost sharing reduction payments are terminated, but they are still subject to state laws on market withdrawal, which limit their ability to do so. They may not terminate their exchange enrollees unless they fail to pay their premiums, which many likely would do once an insurer left the exchange and premium tax credits were no longer available.

The effect of CSR payment termination, however, will depend heavily on how insurers deal with the change. In several states, including California, insurers have anticipated the termination and have already loaded the lost payments into their on-exchange silver plans. In other states, however, insurers have to date been instructed to assume that the payments will be made, or have been given no instructions whatsoever. In these states, the change is likely to cause considerable confusion. Insurers will have to refile their rates and will likely not be able to do so before open enrollment begins in three weeks. For more on the different responses insurers may have take, see here.

What Might Happen Now

It is possible that the states that have intervened in the House v. Price appeal will seek to block the withdrawal of the funds. It is also very possible that the state attorneys general or a consumer or insurer will sue to block the CSR withdrawal. New York Attorney General Eric Schneiderman issued a press release yesterday threatening legal action if President Trump withdraws the payments, and the California Attorney General has also threatened suit.

It is also possible that Congress will adopt a specific appropriation to fund the CSRs, putting to rest the question of whether such an appropriation exists. The Senate Health, Education, Labor, and Pension Committee held hearings on bipartisan solutions to health reform problems in September and virtually every witness, including insurance commissioners and governors supported removing the uncertainty around the payments and making it clear that they would continue. Support for continuing CSR funding has come from insurers, consumers, the National Association of Insurance Commissioners, and virtually all other stakeholders. The President’s statement, and the likely consequent chaos in the individual marketplaces, may be enough to finally prompt action.

In any event, ending the CSR payments is another sign that President Trump is doing what he can to undermine the stability of the individual market under the ACA. This action will have a much more immediate impact than the measures Trump announced in yesterday’s executive order.

18 states sue over Trump-halted ObamaCare payments

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http://thehill.com/policy/healthcare/355360-15-states-sue-over-trump-halted-obamacare-payments

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A new multi-state lawsuit has been announced to stop President Trump from halting key ObamaCare payments to insurers.

Eighteen states and Washington, D.C., signed onto the lawsuit filed Friday in federal court in California, according to Sarah Lovenheim, a spokeswoman for California Attorney General Xavier Becerra (D).

On Thursday night, Trump announced he would stop making the payments, which led to an outcry from critics saying he was sabotaging the health-care law.

The complaint will seek a temporary restraining order, preliminary injunction and permanent injunction requiring the cost-sharing reduction payments be made.

The administration, on a monthly basis, had been funding cost-sharing reduction subsidies, which compensate insurers for lowering the out-of-pocket costs of certain ObamaCare enrollees.

Trump has repeatedly signaled he might cut them off, while insurers have been pleading for long-term certainty that they would continue.

“Without the Affordable Care Act [ACA] and its subsidies for these families, millions more would be left in the cold without coverage. California isn’t about to turn its back on hardworking families who are fighting to hold onto their ACA health insurance. We’ve taken the Trump administration to court before and won, and we’re ready to do it again if necessary,” Becerra said in a statement Thursday night, before the lawsuit was officially announced.

Additionally, New York Attorney General Eric Schneiderman (D) said he anticipates proceeding with litigation on a case that’s currently been on hold.

The House sued the Obama administration, arguing the White House was illegally funding cost-sharing reduction subsidies payments to insurers.

Earlier this summer, the U.S. Court of Appeals for the District of Columbia Circuit ruled that a coalition of attorneys general — including Schneiderman and Becerra — can defend the payments.

“The fast track for initial relief will be in the case we’re filing in California,” Schneiderman said, referring to the new lawsuit.

 

President Moves to Weaken Health Care Law

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http://www.aarp.org/politics-society/advocacy/info-2017/trump-sign-order-eliminating-aca-rules-fd.html

President Executive order Moves to Weaken Affordable Care Act

Two new decisions would lead to higher health costs for older and sicker Americans.

A new executive order and a subsequent announcement on health care subsidies will shake up the insurance market.

President Trump has delivered a one-two punch to the Affordable Care Act (ACA). Late Thursday he announced the elimination of the subsidy payments to insurers that help lower-income Americans afford health care. That move came just hours after he signed an executive order that he says will promote more competition in the health insurance market.

The payments to insurers help fund subsidies that assist lower-income Americans in paying for deductibles, copays and other out-of-pocket health care expenses. The president had been threatening to cut off the subsidy payments for months.

The nonpartisan Congressional Budget Office had earlier estimated that if subsidy payments were withheld, premiums for individuals who buy the most popular health plans on the ACA health insurance marketplace would soar by 20 percent next year and 25 percent by 2020.

The president’s moves come just two weeks before the start of marketplace open enrollment. Insurers had threatened to abandon the marketplace if the subsidies were cut off. Some states have already signaled plans to challenge that action in court.

Congress has tried repeatedly over the past few months to repeal and replace the ACA. Thursday’s announcements are part of the president’s latest strategy to continue those attempts in the absence of congressional action. AARP has strongly opposed any repeal of the health care law.

The executive order directs the secretary of labor to consider expanding the ability of small businesses to form so-called association health plans. These plans may be able to avoid many state and federal insurance regulations. They could, for example, be exempt from the ACA rules that protect older Americans and people with preexisting health conditions from being charged far higher premiums as well as the ACA requirement to provide essential health benefits — such as emergency room care and mental health services.

The impact of these changes would potentially sting millions of older and sicker Americans. That’s because the new insurance options would likely attract low-risk individuals — who are generally healthier — leaving older, sicker people in the current individual market. Since those plans would be so heavily weighted with sick people, policyholders would pay significantly higher premiums.

“The order aims to create loosely regulated insurance plans that could provide skimpier benefits and cheaper premiums to young and healthy people, but that would make coverage more expensive for older people and those with preexisting conditions,” said Larry Levitt, senior vice president for special initiatives at the nonpartisan Henry J. Kaiser Family Foundation. “However, there are still a lot of unanswered questions about how this would all work and how much legal authority the administration really has.”

The order also paves the way for broader use of short-term policies that are not required to include essential health benefits nor cover people with preexisting medical conditions. Such short-term plans often serve as a bridge for people between jobs. Under the previous administration, individuals could buy the plans for only three months. The order would expand their duration to nearly a year.

And the president is asking the secretaries of labor, treasury, and health and human services to allow more businesses to use health reimbursement arrangements. Under the arrangements, businesses could use pretax dollars to reimburse employees for out-of-pocket medical costs and premiums.

Insurance premiums already are in place for 2018, and most insurers had anticipated the loss of the subsidy payments and set rates considerably higher to take that into account. Those that haven’t may ask state insurance commissioners to allow them to increase premiums.

There Are Few Silver Linings to Trump’s Health-Care Order

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https://www.bloomberg.com/news/articles/2017-10-12/trump-s-health-care-executive-order-few-silver-linings

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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.

Trump to cut off key ObamaCare payments

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President Trump will end key payments to insurers selling ObamaCare plans, the White House announced late Thursday, marking Trump’s most aggressive move yet to dismantle the law after multiple GOP efforts to repeal and replace it failed this year.

The Trump administration has continued making the the disbursements to insurers, known as cost-sharing reduction payments, on a monthly basis. But Trump had consistently threatened to end the payments, which are worth an estimated $7 billion this year.

“Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare. In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments,” the White House said in a statement late Thursday night.

The payments were created as part of the Affordable Care Act but were then the subject of a lawsuit by House Republicans during the Obama administration. A federal court ruled the payments were being made illegally, but the Obama administration appealed.

Congress could still decide to appropriate the payments, and there is bipartisan agreement that they should be made. But no action has been taken, and some Republicans are hesitant to vote for what they see as a bailout of ObamaCare.

“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people,” White House press secretary Sarah Huckabee Sanders said.

The administration’s decision is likely to lead to lawsuits. It also puts enormous pressure on lawmakers to reach a deal on funding the payments, adding yet another partisan battle to an already full calendar.

Senate Minority Leader Charles Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) issued a joint statement calling the decision a “spiteful act of vast, pointless sabotage … now, millions of hard-working American families will suffer just because President Trump wants them to.”

Meanwhile, Speaker Paul Ryan (R-Wis.) praised the decision to end the Obama administration’s appeal of the subsidies.

“Today’s decision … preserves a monumental affirmation of Congress’s authority and the separation of powers,” Ryan said in a statement. “Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with the Trump administration to provide the American people a better system.”

Cutting off the subsidies could throw the ObamaCare marketplace into chaos.

The Congressional Budget Office (CBO) said in August that about 1 million additional people would be uninsured in 2018 and insurance companies would raise premium prices by about 20 percent for ObamaCare plans if the payments were cut off.

The CBO also said halting the payments would increase the federal deficit by $194 billion through 2026, largely because federal assistance to buy ObamaCare plans rises when premiums do.

The payments help low-income people afford co-pays, deductibles and other out-of-pocket costs associated with health insurance policies. Insurers have called the payments critical, saying that without them, they would have to massively increase premiums or exit the individual market.

Many insurers have already priced their plans for the coming open enrollment period, which begins Nov. 1.

The leaders of Senate Health Committee have been working toward a bipartisan deal to fund the payments for two years in order to stabilize the markets in the short term.

But progress was halted when lawmakers tried to pass a last-ditch ObamaCare repeal bill from Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) last month, and the sides have still not reached an agreement.

The decision on the payments comes after Trump on Thursday signed an executive order aimed at loosening ObamaCare restrictions on insurance plans, which also could help destabilize the law.

Trump to Scrap Critical Health Care Subsidies, Hitting Obamacare Again

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 President Trump will scrap subsidies to health insurance companies that help pay out-of-pocket costs of low-income people, the White House said late Thursday. His plans were disclosed hours after the president ordered potentially sweeping changes in the nation’s insurance system, including sales of cheaper policies with fewer benefits and fewer protections for consumers.

The twin hits to the Affordable Care Act could unravel President Barack Obama’s signature domestic achievement, sending insurance premiums soaring and insurance companies fleeing from the health law’s online marketplaces. After Republicans failed to repeal the health law in Congress, Mr. Trump appears determined to dismantle it on his own.

Without the subsidies, insurance markets could quickly unravel. Insurers have said they will need much higher premiums and may pull out of the insurance exchanges created under the Affordable Care Act if the subsidies were cut off. Known as cost-sharing reduction payments, the subsidies were expected to total $9 billion in the coming year and nearly $100 billion in the coming decade.

“The government cannot lawfully make the cost-sharing reduction payments,” the White House said in a statement.

It concluded that “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”

In a joint statement, the top Democrats in Congress, Senator Chuck Schumer of New York and Representative Nancy Pelosi of California, said Mr. Trump had “apparently decided to punish the American people for his inability to improve our health care system.”

“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” they said. “Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it.”

Lawmakers from both parties have urged the president to continue the payments. Mr. Trump had raised the possibility of eliminating the subsidies at a White House meeting with Republican senators several months ago. At the time, one senator told him that the Republican Party would effectively “own health care” as a political issue if the president did so.

“Cutting health care subsidies will mean more uninsured in my district,” Representative Ileana Ros-Lehtinen, Republican of Florida, wrote on Twitter late Thursday. She added that Mr. Trump “promised more access, affordable coverage. This does opposite.”

But Speaker Paul D. Ryan, Republican of Wisconsin, praised Mr. Trump’s decision and said the Obama administration had usurped the authority of Congress by paying the subsidies. “Under our Constitution,” Mr. Ryan said, “the power of the purse belongs to Congress, not the executive branch.”

The future of the payments has been in doubt because of a lawsuit filed in 2014 by House Republicans, who said the Obama administration was paying the subsidies illegally. Judge Rosemary M. Collyer of the United States District Court in Washington agreed, finding that Congress had never appropriated money for the cost-sharing subsidies.

The Obama administration appealed the ruling. The Trump administration has continued the payments from month to month, even though Mr. Trump has made clear that he detests the payments and sees them as a bailout for insurance companies.

This summer, a group of states, including New York and California, was allowed to intervene in the court case over the subsidies. The New York attorney general, Eric T. Schneiderman, said on Thursday night that the coalition of states “stands ready to sue” if Mr. Trump cut off the subsidies.

What the administration has done to weaken the health law.

Mr. Trump’s decision to stop the subsidy payments puts pressure on Congress to provide money for them in a spending bill.

Senator Lamar Alexander, Republican of Tennessee and the chairman of the Senate health committee, and Senator Patty Murray of Washington, the senior Democrat on the panel, have been trying to work out a bipartisan deal that would continue the subsidy payments while making it easier for states to obtain waivers from some requirements of the Affordable Care Act. White House officials have sent mixed signals about whether Mr. Trump was open to such a deal.

The decision to end subsidies came on the heels of Mr. Trump’s executive order, which he signed earlier Thursday.

With an 1,100-word directive to federal agencies, the president laid the groundwork for an expanding array of health insurance products, mainly less comprehensive plans offered through associations of small employers and greater use of short-term medical coverage.

It was the first time since efforts to repeal the landmark health law collapsed in Congress that Mr. Trump has set forth his vision of how to remake the nation’s health care system using the powers of the executive branch. It immediately touched off a debate over whether the move would fatally destabilize the Affordable Care Act marketplaces or add welcome options to consumers complaining of high premiums and not enough choice.

Most of the changes will not occur until federal agencies write and adopt regulations implementing them. The process, which includes a period for public comments, could take months. That means the order will probably not affect insurance coverage next year, but could lead to major changes in 2019.

“With these actions,” Mr. Trump said at a White House ceremony, “we are moving toward lower costs and more options in the health care market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.”

“This is going to be something that millions and millions of people will be signing up for,” the president predicted, “and they’re going to be very happy.”

But many patients, doctors, hospital executives and state insurance regulators were not so happy. They said the changes envisioned by Mr. Trump could raise costs for sick people, increase sales of bare-bones insurance and add uncertainty to wobbly health insurance markets.

Chris Hansen, the president of the lobbying arm of the American Cancer Society, said the order “could leave millions of cancer patients and survivors unable to access meaningful coverage.”

In a statement from six physician groups, including the American Academy of Family Physicians, the doctors predicted that “allowing insurers to sell narrow, low-cost health plans likely will cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options.”

While many health insurers remained silent about the executive order, some voiced concern that it could destabilize the market. The Trump proposal “would draw younger and healthier people away from the exchanges and drive additional plans out of the market,” warned Ceci Connolly, the chief executive of the Alliance of Community Health Plans.

Administration officials said they had not yet decided which federal and state rules would apply to the new products. Without changing the law, they said, they can rewrite federal regulations so that more health plans would be exempt from some of its requirements.

The Affordable Care Act has expanded private insurance to millions of people through the creation of marketplaces, also known as exchanges, where people can purchase plans, in many cases using government subsidies to offset the cost. It also required that plans offered on the exchanges include a specific set of benefits, including hospital care, maternity care and mental health services, and it prohibited insurers from denying coverage to people with pre-existing medical conditions.

The executive order’s quickest effect on the marketplaces would be the potential expansion of short-term plans, which are exempt from Affordable Care Act requirements. Many health policy experts worry that if large numbers of healthy people move into such plans, it would drive up premiums for those left in Affordable Care Act plans because the risk pool would have sicker people.

“If the short-term plans are able to siphon off the healthiest people, then the more highly regulated marketplaces may not be sustainable,” said Larry Levitt, a senior vice president for the Kaiser Family Foundation. “These plans follow no rules.”

Mr. Trump’s order would also eventually make it easier for small businesses to band together and buy insurance through entities known as association health plans, which could be created by business and professional groups. A White House official said these health plans “could potentially allow American employers to form groups across state lines” — a goal championed by Mr. Trump and many other Republicans — allowing more options and the formation of larger risk pools.

Association plans have a troubled history. Because the plans were not subject to state regulations that required insurers to have adequate financial resources, some became insolvent, leaving people with unpaid medical bills. Some insurers were accused of fraud, telling customers that the plans were more comprehensive than they were and leaving them uncovered when consumers became seriously ill.

The White House said that a broader interpretation of federal law — the Employee Retirement Income Security Act of 1974 — “could potentially allow employers in the same line of business anywhere in the country to join together to offer health care coverage to their employees.”

The order won applause from potential sponsors of association health plans, including the National Federation of Independent Business, the National Restaurant Association, the U.S. Chamber of Commerce and Associated Builders and Contractors, a trade group for the construction industry.

The White House released a document saying that some consumer protections would remain in place for association plans. “Employers participating in an association health plan cannot exclude any employee from joining the plan and cannot develop premiums based on health conditions” of individual employees, according to the document. But state officials pointed out that an association health plan can set different rates for different employers, so that a company with older, sicker workers might have to pay much more than a firm with young, healthy employees.

“Two employers in an association can be charged very different rates, based on the medical claims filed by their employees,” said Mike Kreidler, the state insurance commissioner in Washington.

Mr. Trump’s order followed the pattern of previous policy shifts that originated with similar directives to agencies to come up with new rules.

Within hours of his inauguration in January, he ordered federal agencies to find ways to waive or defer provisions of the Affordable Care Act that might burden consumers, insurers or health care providers. In May, he directed officials to help employers with religious objections to the federal mandate for insurance coverage of contraception.

Both of those orders were followed up with specific, substantive regulations that rolled back Mr. Obama’s policies.

In battles over the Affordable Care Act this year, Mr. Trump and Senate Republicans said they wanted to give state officials vast new power to regulate insurance because state officials were wiser than federal officials and better understood local needs. But under Thursday’s order, the federal government could pre-empt many state insurance rules, a prospect that alarms state insurance regulators.

Another part of Mr. Trump’s order indicates that he may wish to crack down on the consolidation of doctors, hospitals and other health care providers, a trend that critics say has driven up costs for consumers. Mr. Trump said that administration officials, working with the Federal Trade Commission, should report to him within 180 days on federal and state policies that limit competition and choice in the health care industry.

Trump administration ends cost-sharing reduction payments under ACA

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Insurers have said the move will destabilize the individual market and increase premiums by at least 20 percent.

In a move insurers have long said would destabilize the individual market and increase premiums by at least 20 percent, the Department of Health and Human Services late Thursday ended cost-sharing reduction payments.

At least one state attorney general, AG Eric Schneiderman of New York, has said he would sue the decision. The court granted a request to continue funding for the subsidies, Schneiderman said.

California may also sue the administration over the decision.

“I am prepared to sue the #Trump Administration to protect #health subsidies, just as when we successfully intervened in #HousevPrice!” California AG Xavier Becerra tweeted Thursday night.

In May, Schneiderman and Becerra led a coalition of 18 attorneys general in intervening in House v. Price over the cost-sharing reduction payments.

The cost-sharing reductions payments will be discontinued immediately based on a legal opinion from Attorney General Jeff Sessions, said Acting HHS Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma.

“It has been clear for many years that Obamacare is bad policy.  It is also bad law,” HHS said. “The Obama Administration, unfortunately, went ahead and made CSR payments to insurance companies after requesting – but never ultimately receiving – an appropriation from Congress as required by law. In 2014, the House of Representatives was forced to sue the previous Administration to stop this unconstitutional executive action. In 2016, a federal court ruled that the Administration had circumvented the appropriations process, and was unlawfully using unappropriated money to fund reimbursements due to insurers.  After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution.  Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”

Trump tweeted this morning, “The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

Insurers reached and America’s Health Insurance Plans did not have an immediate comment on the ending of the subsidies.

The move to end CSRs comes weeks before the start of open enrollment on Nov. 1, but many insurers had submitted rates reflecting the end of the subsidies that allowed them to offer lower-income consumers lower deductibles and out-of-pocket costs.

America’s Essential Hospitals said it was alarmed by news of administration decisions that could create turmoil across insurance markets and threaten healthcare coverage for millions.

“This decision could leave many individuals and families with no options at all for affordable coverage,” said Bruce Siegel, MD, CEO of America’s Essential Hospitals. “We call on Congress to immediately shore up the ACA marketplace and to work in bipartisan fashion, with hospitals and other stakeholders, toward long-term and sustainable ways to give all people access to affordable, comprehensive care.”

Today’s CSR decision follows yesterday’s executive order from President Trump to allow for association health plans that could circumvent Affordable Care Actmandates on coverage. The executive order must go through the federal rulemaking process and may also face legal challenges.

AHIP was swift to react to Trump’s order.

“Health plans remain committed to certain principles. We believe that all Americans should have access to affordable coverage and care, including those with pre-existing conditions. We believe that reforms must stabilize the individual market for lower costs, higher consumer satisfaction, and better health outcomes for everyone. And we believe that we cannot jeopardize the stability of other markets that provide coverage for hundreds of millions of Americans,” said spokeswoman Kristine Grow. “We will follow these principles – competition, choice, patient protections and market stability – as we evaluate the potential impact of this executive order and the rules that will follow. We look forward to engaging in the rulemaking process to help lower premiums and improve access for all Americans.”

The American Academy of Family Physicians and five other medical associations representing more than 560,000 doctors have expressed serious concerns over the effect of President Trump’s executive order directing federal agencies to write regulations allowing small employers to buy low-cost insurance that provides minimal benefits.

In a joint statement, the AAFP, the American Academy of Pediatrics, the American College of Physicians, the American Congress of Obstetricians and Gynecologists, the American Osteopathic Association and the American Psychiatric Association strongly rejected the order they said would allow insurers to discriminate against patients based on their health status, age or gender.

Republicans tried to repeal and replace the ACA, and since that failed are trying to end consumer protections under the law, according to U.S. Representative Bill Pascrell Jr., a Democrat from New Jersey and a member of the Ways and Means Committee.

“Republicans have been on the warpath trying to end important consumer protections that the ACA affords, including protections for people with pre-existing conditions and required coverage for services that people actually need, like mental health care,” Pascrell said. “Now that they’ve failed in that endeavor, the Trump Administration is trying to use the back-door with this executive order.”

A Congressional Budget Office analysis released in August said the CSRs, which cost an estimated $7 billion a year, could end up costing the federal government $194 billion over a decade.