President Trump is expected to sign an executive order next week that will allow people to buy lower-cost health insurance that can circumvent some of the mandates created under Obamacare.
Additional details of the executive order, which is being billed as a move that would allow insurance to be sold across state lines, were reported Saturday by the Wall Street Journal. Trump will direct the Departments of Health and Human Services, Labor, and Treasury to take steps to make it easier for people to band together and buy coverage through what is known as "association health plans." It would also allow people to buy low-cost short-term health insurance plans, which the Obama administration limited to three months, and would expand the use of health savings accounts.
The Department of Labor, for instance, could look into making regulatory changes to the Employee Retirement Income Security Act, known as ERISA. Through new regulations, an individual or a handful of people could join an association health plan and they would be considered one large employer for the purpose of providing coverage. Regulations currently stipulate that members have to be in the same industry and that they have to be involved in the day-to-day decisions of a business.
Sen. Rand Paul, R-Ky., had been working with the Trump administration to encourage the executive order. The Washington Examiner detailed Paul's proposal in a report on Oct. 2.
The plans offered by associations would be less expensive because they wouldn't have the same requirements as Obamacare coverage. For instance, they wouldn't be required to cover customers with pre-existing illnesses and could either deny coverage or charge these customers more. They also would not be required to provide coverage for a range of medical care, from addiction to maternity services. Insurers would be likely to sell coverage from a state with the fewest restrictions, which is why its supporters bill it as a move that would allow a long-stated conservative goal to sell health insurance across state lines.
Association health plans used to be more common before Obamacare, which placed restrictions on their use.
Lifting these protections would offer less comprehensive coverage, but would also make health plans less expensive. Critics worry that they set people up for "junk insurance" and would further destabilize the Obamacare exchanges, which already are plagued with mass exits by insurers and double-digit premium hikes. The move, critics say, could result in an even sicker population on the exchanges while healthier customers are picked off into the association health plans.
Still, the proposal is popular with conservatives. Middle class customers who don't receive subsidies under Obamacare are facing the prospect of buying more expensive coverage in 2018 through Obamacare's exchanges, and could avail themselves of the option. Through a short-term health insurance option, they face similar coverage as those sold on association health plans.
The increases these customers face come as a result of lack of profitability in the markets as well as vast uncertainty over what the Republican-controlled Congress and the Trump administration would do about the law as they sought for months to repeal or overhaul portions of it.