What Does Trump's Executive Order Mean for Obamacare?

Marcia Frellick

January 25, 2017

When President Trump issued an executive order Friday to "ease the burden of Obamacare," he sent a clear message that his administration intends to abolish the Affordable Care Act (ACA).

But the order does not repeal the ACA, nor does it make immediate changes to Americans' insurance.

Healthcare law experts help sort out what did happen, what could happen, and by what timeline.

The Executive Order

Executive orders are used for foreign and domestic issues. Domestically, they are used to set broad policy.

Trump on Friday directed departments and federal agencies to "take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market."

In this case, "It's basically an announcement of an intention, and it is far more symbolic than it is likely to have policy effects," Sam Halabi, JD, associate professor of law at the University of Missouri in Columbia and scholar at the O'Neill Institute for National and Global Health Law at Georgetown University in Washington, DC, told Medscape Medical News. "It was largely signed to speak to the constituency who wanted addressing or repealing Obamacare to be a priority of the administration."

Change in Direction

Timothy Jost, JD, professor emeritus at Washington and Lee University School of Law in Harrisonburg, Virginia, and a member of the National Academy of Medicine, told Medscape Medical News the order set the parameters for a change in direction.

"The Obama administration had a priority of covering people with low incomes and people with health problems, and the priorities for the Trump administration are going to be deregulation, reducing taxes, transferring responsibility for health coverage to the states, and increasing marketplace competition," he said.

Friday's order set out an agenda to interpret the ACA with those policy priorities in mind, he said.

Changing Regulations Takes Time

But nothing is likely to change quickly. Insurers are under contract for the rest of the year, and, barring emergencies, changing regulations takes drafting the language, submitting the proposal for a comment period that often lasts months, possibly running the proposal by the federal Office of Management and Budget, and, if approved, allowing time for an effective date.

"Most of the Affordable Care Act was done through regulation," Jost notes.

The most likely change this year will be in an expansion of hardship waivers for the individual mandate, experts say.

Although essential healthcare benefits would have to remain, under the provisions of the law, the way those services are delivered could change. Jost said possible changes could conceivably include fewer covered drugs or caps on visits.

Making it too easy to get the exemptions could destabilize the insurance market, Jost said, because popular parts of the law, such as covering those with preexisting conditions, depend on broad uptake, especially among healthy people.

He points to the Congressional Budget Office (CBO) report released January 17, which says repealing major portions of the ACA without a replacement could result in 18 million people losing health insurance in the first year.

He says the message of the CBO and nonpartisan think tanks is to be careful with a fragile market.

"I've talked with insurance companies who say, 'We don't need the individual insurance market. It's less than 10% of business. If they're going to make it too hard, we're going to do stuff we can make money doing,' " Jost said. He added that if insurers pull out, providers will be left with mounting uncompensated care.

Halabi says the Trump administration has "demonstrated a sensitivity to the interests of insurers," who have made it clear that they need some predictability in the exchange markets. For that reason, he said, he doesn't see radical action on the individual mandate waivers.

States Will Get More Say

Cynthia Cox, associate director of health reform and private insurance for the Kaiser Family Foundation, said it will be months before next steps become clear and what effects they would have on insurers for 2018 and beyond.

What was clear after Trump's executive order, she told Medscape Medical News, is that states will get more say in managing Medicaid.

That had been a sore point under Obama, because states felt some of their choices were being taken away by the federal government.

Some states were successful in getting waivers to use a different model to expand Medicaid, she said. Arkansas, for example, used private insurers to expand the coverage, but exemptions were not granted to all.

The Trump administration may be more willing to offer states those alternatives, she said. That could come with charging premiums, sharing costs, or imposing restrictions on how long people may be enrolled or requiring people to prove they are working or can't work as a condition of receiving the benefits, she said.

Cox said states that feel Obamacare isn't working for them have the option of implementing their own version of healthcare reform under a "1332 waiver." But to do that, they would have to prove they could provide similar coverage at a similar cost.

"We have not seen a lot of action around these," Cox said. "That may be what the Trump administration is signaling, that if states want to experiment with their own version of health reform, they are willing to work with them."

The challenge is that with the repeal and replace movement going on in Congress, there may be a new federal plan in place before states can offer alternatives.

Proposal Allows States to Opt Out of Law

On Monday, four Republican senators introduced a replacement for the ACA that would allow states to opt out of the law.

Called the Cassidy-Collins bill, the legislation was introduced by Senators Bill Cassidy (R-La), Susan Collins (R-Maine), Shelley Moore Capito (R-WVa), and Johnny Isakson (R-Ga).

They say their proposal is not affected by Friday's executive order.

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