With ACA repeal and/or replace a “bust” in Washington D.C. for the time being, President Trump took to Executive Order (EO). Yesterday, the President issued an Executive Order entitled “Promoting Healthcare Choice and Competition Across the United States.”
On its face, the EO details extensive criticism of the ACA and the current state of its exchanges. Citing the limited the choice of healthcare options and corresponding large premium increases in many State individual markets for health, the Presidential Memorandum states that it “shall be the policy of the executive branch, to the extent consistent with law, to facilitate the purchase of insurance across State lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for the American people.”
In short, to carry out this policy, the EO targets expansion (and decreased regulation) of association health plans (AHPs), short-term, limited-duration insurance (STLDI), and health reimbursement arrangements (HRAs). A summary description of each of these targeted areas is below.
- AHPs: The order seeks to expand access to AHPs to help small businesses compete with larger employers (who have a larger risk pool and thereby can often seek lower insurance rates) by allowing them to group together to self-insure or purchase large group health insurance. Within 60 days of the EO, the Secretary of Labor is directed to “consider proposing regulations or revising guidance, consistent with law,” to expand access to health coverage by allowing more employers to form AHPs. Presumably, the intent is to carve out AHPs from regulation as a MEWA, which causes certain regulatory and administrative burdens. Historically, although questions have been raised as to whether a plan sponsored by a group or association acting on behalf of its employer-members constitutes a single employer for purposes of the MEWA definition, the DOL has historically concluded that such plans are not sponsored by a single employer unless part of a control group. The Secretary of Labor is now being asked to revisit that guidance, particularly with a focus on geography and industry.
- STLDI: Within 60 days of the date of the EO, the Secretaries of the Treasury, Labor, and Health and Human Services are required to “consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI.” Under current law, STLDI is only available for up to 3 months without extensions. The EO notes that it was the Obama administration that had taken steps “to restrict access to this market by reducing the allowable coverage period from less than 12 months to less than 3 months and by preventing any extensions selected by the policyholder beyond 3 months of total coverage.”
- HRAs: Pre-ACA, these tax-advantaged, account-based arrangements were often employed by many small and large employers to allow payment of permissible medical expenses. In a simplified manner, the ACA required integration of HRAs with qualifying coverage thereby restricting the use of these arrangements. Over time, more flexibility was given for use of HRAs. Yesterday’s EO looks to further expand the flexibility and use of HRAs. Within 120 days of the EO, the Secretaries of the Treasury, Labor, and Health and Human Services are directed to consider proposing regulations or revising guidance that “to the extent permitted by law and supported by sound policy” to do three things: (i) increase the usability of HRAs, (ii) to expand employers' ability to offer HRAs to their employees, and (iii) to allow HRAs to be used in conjunction with nongroup (presumably individual) health coverage. Whether HRAs are intended to be available more like health savings accounts (HSAs) which are generally only available to pair with qualifying high-deductible health plan (“HDHP”) remains to be seen.
The Secretaries of the Treasury, Labor, and Health and Human Services will have a busy Q4 of 2017 ahead of them to follow these directives. The EO is expressly intended to re-inject “competition” into the country’s healthcare markets and limit excessive consolidation throughout the healthcare system; time will tell whether the response of the Secretaries of the Treasury, Labor, and Health and Human Services will actually meaningfully chip away at the ACA and expand more “loopholes” for Americans to buy insurance outside the ACA’s markets. And, in the near term, the question remains whether this EO will, as predicted in certain circles, further destabilize – or cause collapse of – the market for customers who are left behind with higher premiums and fewer insurers.