As Congressional attempts to repeal the Affordable Care Act led by a Republican majority remain stalled, President Donald Trump took two actions on Oct. 12 that he said will help in “saving the American people from the nightmare of Obamacare.” But officials in New York have expressed concerns the moves will only add turmoil to the health care market.
The Republican president that afternoon signed an executive order directing federal agencies to explore rule changes that would expand access to more loosely regulated health plans. Later the same day, Trump announced plans to cut off federal subsidy payments to health insurance companies.
While U.S. Sen. Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) have reportedly reached a bipartisan deal to fund the subsidies, known as cost-sharing reduction payments, Congress still has to approve the plan. In Albany, Democratic officials have promised legal action against the Trump administration if the subsidies are cut off.
On Oct. 13, New York Attorney General Eric T. Schneiderman announced plans to file a lawsuit with 19 other state attorneys general challenging Trump’s withholding of the subsidies.
“These subsidies make critical health care affordable for our most vulnerable,” Schneiderman said. “President Trump’s move to cut these subsidies is a reckless assault on the health care of thousands of New Yorkers and millions of Americans.”
On Oct. 18, Schneiderman filed a motion to compel the federal government to pay the subsidies.
Gov. Andrew Cuomo said that unable to pass legislation in Congress, Trump is attempting to “administratively dismantle the ACA bit by bit. His actions will slash benefits and raise premiums, and it will single-handedly destabilize insurance markets.”
Trump has argued the subsidies represent a bailout to insurance companies and that the White House cannot lawfully disburse them.
Trump characterized the executive order as a necessary step to address increasing health insurance premiums following the passage of the Affordable Care Act in 2010.
“I just keep hearing ‘repeal and replace, repeal and replace,’” Trump said at the official signing for the order. “Well, we’re starting that process, and we’re starting it in a very positive manner.”
Part of the order directs Secretary of Labor R. Alexander Acosta to consider expanding access to association health plans and allowing those plans to operate across state lines. This, according to the order, would allow small businesses across the country to join together for cheaper health care coverage.
By crossing state lines, the plans could be exempted from certain benefits mandated at the federal level by the Affordable Care Act. Customers in states with more stringent coverage mandates, such as New York, could potentially buy into association plans regulated by states with lower coverage standards.
That could mean cheaper plans, but also skimpier benefits. The 5,000-member American Hospital Association warned the executive order “will allow health insurance plans that cover fewer benefits and offer fewer consumer protections. No one can predict future health care needs with complete certainty and such plans could put patients at risk when care is needed most.”
James Newhouse, founder of Newhouse Financial and Insurance Brokers in Rye Brook, said he would be concerned about oversight for the plans.
“The concept sounds great. The idea of people being able to have more choice is always good and the idea of finding ways to drive down prices is also good,” Newhouse said.
“My concern is, who is responsible for oversight and coordination between federal and state regulators of association plans?” Newhouse asked. “Without adequate protections for consumers, it would not only be difficult to navigate problems with plans, it could also be difficult for the plan sponsor to know what jurisdiction is overseeing the plan.”
The executive order also tells federal agencies to review rules to allow for additional use of cheaper short-term health insurance plans and employer health reimbursement arrangements.
The executive order received mixed praise from national small business groups. Juanita Duggan, CEO of the National Federation of Independent Business, said in a statement that Trump’s executive order advances NFIB’s effort “to remove penalties on small businesses for helping their workers buy health insurance.” NFIB has previously led a challenge to the Affordable Care Act in the Supreme Court.
The National Small Business Association, however, was more cautious. Its CEO, Todd McCracken, said any regulations should be crafted carefully to avoid having healthier individuals “siphoned off into a lower-cost, benefit-light plan, leaving older, sicker people in unsustainable, costly insurance pools.”
The New York Health Plan Association, which represents the state’s insurers, cautioned that the executive order could “undermine New York’s risk pool, creating new winners and losers, and reduce consumer protections by allowing new policies that don’t have to comply with certain rules required by the Affordable Care Act.”
Most of the changes Trump’s executive order calls for involve federal rule changes that require internal review and a public comment period, a process that analysts expect to last months. As for the insurance subsidies, The New York Times reported on Oct. 17 that Trump did voice support for the potential bipartisan deal to fund them, though the report noted its passage is still not assured.