Trump’s (overlooked) plans for employer coverage

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Trump’s executive order will likely include a provision making it easier for employers to set aside some money, tax-free, to help their workers pay insurance premiums. This one hasn’t gotten as much attention yet as some of the other policies Trump is expected to pursue, but it’s a big deal — one insurers fear could push more people into a shaky market.

The details: Employers already can set aside some pre-tax dollars to help cover employees’ health care costs. Trump’s executive order will likely expand those programs so that they can be used to help employees cover the premiums for an individual insurance policy, an insurance industry official told me.

The reactions:

  • Insurers are afraid this will give employers an incentive to stop offering traditional health benefits: Why go to all the trouble of finding and offering a health care plan if you can just offer your workers some money to go buy their own?
  • “That would be survivable, I think,” if the individual market were more stable, the official said. But because that market is shaky, insurers are nervous.
  • Another fear: Employers might be able to offer coverage to their younger employees, while using these new funds to shift older workers, who tend to have higher health care costs, into the individual market.

The unknowns: Dumping workers into the individual market, even with help paying their premiums, would likely trigger penalties under the Affordable Care Act’s employer mandate, the insurance official said. That might be a disincentive to use these new options — if the Trump administration were planning tough enforcement of the employer mandate.

The bottom line: Other sections of Trump’s executive order will likely pull healthy people out of the individual market; this one could push unhealthy people into it. Insurers are uneasy about both sides of that equation, and say they haven’t had a chance to offer the policy feedback previous administrations would have sought out.

What else to expect from Trump’s executive order

Here’s a quick rundown of what else to expect from today’s executive order:

  • The order itself probably won’t fill in the details of how its policy changes would work. Look for broad outlines, with the nitty-gritty coming separately — probably in the form of a proposed rule from the Labor Department.
  • Although the public will technically have an opportunity to comment on that proposed rule, the insurance industry official told me the final version is largely already written.

The policy:

  • Association health plans: Trump will likely make it easier for individuals (for example, a group of freelancers) to band together and buy insurance like a large employer would.
  • New associations will likely need some form of approval before they can start buying insurance, but insurers don’t expect that process to be much more than a rubber stamp.
  • Short-term plans: Trump is expected to let people hang onto short-term, stopgap policies for a full year; they’re currently limited to three months. Those plans don’t cover much and don’t have to comply with many of the ACA’s consumer protections.
  • Total impact: Insurers and independent policy experts fear that both of those measures would weaken the individual market by pulling healthy people out of it and into skimpier, cheaper coverage.