Unaffordable Healthcare

Trump’s latest Executive Order is another swipe at Obamacare, but it does not repeal or replace it.In general, the executive order has no force of law itself. What it does do is influence how regulations are put together. It is those regulations that represent how a law is implemented and how it is enforced. Trump’s executive order asks three federal agencies to consider possible new regulations that could help achieve certain goals, like providing more policy options for the young, allowing small business associations to provide health insurance plans that cross state lines and expanding access to short-term insurance policies, those that offer coverage for 90 days or less. It is not clear what those rules will say.

failed healthcare billPreviously Trump issued an executive order that let a broader range of employers stop offering free contraception through their healthcare plans. It said that regulations should interpret the Supreme Court Hobby Lobby decision to enable employers who have a sincerely held moral and/or religious convictions to opt-out of the free contraceptive benefit currently in their policies. Loosely interpreted, an employer could be morally opposed to paying more for healthcare.

Anytime a benefit is excluded from a policy, the plan costs less. If you find paying more for health insurance morally offensive, you can now opt out of providing free contraception. It is that simple.

The other thing Trump can do is use Executive Orders to curtail the activities of the executive branch of government. This allowed Trump to use executive orders to shut down the Affordable Care Act website for 12 hours every Sunday during open enrollment, cut the budget by 40% that funds groups that help people enroll, and cut the advertising budget for the ACA from $100 million to $10 million. Such actions make it less likely people will enroll. In addition, his decision to limit enforcement of the ACA has wide consequences. Knowing that the individual mandate is unlikely to be enforced and the companies will unlikely be penalized for not offering insurance makes it less likely those people will purchase expensive exchange policies.

Trump and Paul RyanTrump is seeking to end subsidies paid directly to health insurance companies that help low-income people. He wants that money paid directly to the states instead. Trump is also seeking to eliminate the exclusivity requirement that all plans be conforming to the ACA and offer the essential health benefits, such as well-care like physicals and/or preventative care like mammographies, as defined in the Affordable Care Act.

The real impact of these executive orders will be felt by the self-employed, the working poor, and the middle class. What this means is that those who are not covered by group benefit plans, plans provided by their employer, are going to be unable to purchase health insurance. Not because it won’t be available, that is a false premise. They won’t be able to buy it because what will be available will be unaffordable. This year, in California, a policy covering two adults in their 50’s and their grown child will likely cost more than $20,000, with a $10,000 deductible and copays of $70 for specialist visits. Because of the exodus of young people into lower costs products that will likely result from the implementation of the executive order, the increase in the cost of this same policy could be up to 40% or more. What family can afford $42,000 in payments before the insurance company contributes their first dollar?

It should be noted that the states, not the federal government, set policy prices. Policy prices for 2018 have been set. At this point, states are not authorizing new policy types or increases in costs to offset the uncertainty. What happens in 2019, at this point, is unknown. In California, is an insurance company pulls out of the state, they have to wait 3 years to come back in. Insurance commissioners can stop the exodus of insurance companies by either making them be all in or all out. We will have to wait and see if more carriers pull out and if state insurance commissioners hold the line on cost.

Remember, State Insurance Commissioners are politicians and subject to influence. If you are angry, this is the place where your voice can be heard.

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