Trump’s Order on Association Health Plans Explained

Trump ObamaCare Order: Trump Signs Order on Association Health Plans, Short Term Coverage, and HRAs

President Trump signed an executive order on Oct 12, 2017, to expand access to “association health plans,” to expand these across state lines, to expand short-term coverage, and to expand HRAs. This executive order will affect the Affordable Care Act, but most indirectly by drawing people away from ACA compliant plans (thus potentially increasing premiums on marketplace plans, thus resulting in the taxpayers being on the hook for the funding of more cost assistance which caps costs based on income).^[1]

Although the executive order itself isn’t yet available, we do have a transcript from the signing that can give us insight into what the order does. Here is the gist of what the order it does. It is followed by the related part of the transcript.

1. Trump’s executive order will allow more small businesses to form associations health plans where individuals and small business can group together to buy plans. This Rand Paul initiated policy allows these groups to have purchasing power more like large businesses.
2. Trump is also directing Secretary Acosta to consider ways to expand these associations and these healthcare plans all across state lines.
3. Trump is also exploring how they can expand short-term health insurance, which he calls “short-term limited duration insurance.” Short-term insurance is not subject to the ACA’s benefits, rights, and protections and doesn’t protect you from the fee for not having coverage, or as Trump says “mandates and rules.”
4. Trump is also instructing Secretaries Acosta, Mnuchin, and Hargan to explore how they can allow more businesses to use tax-free health reimbursement arrangements or HRAs to compensate their employees for their healthcare expenses. HRAs were limited under the ACA.
5. Then to end, Trump says that he plans more measures, such as massive tax cuts. See Tax Policy Center on the potential effects of these tax cuts.d

General Pros and Cons of Trump’s Order: On one hand, the order will expand choices to lower cost / lower benefit plans. This is good for those who are healthy and currently having trouble affording premiums. See Rand Paul: Trump exec order moves toward free-market health care by the Conservative Review. On the other hand, allowing a range of limited benefit and low cost options means that that the more robust plans could see a premium increase as healthy people are lured away into cheaper plans. See: Trump signs order to eliminate ACA insurance rules, undermine marketplaces by the Washington Post.

Transcript below from WhiteHouse.Gov: Remarks by President Trump at Signing of Executive Order Promoting Healthcare Choice and Competition.

“… in a few moments, I will sign an executive order taking the first steps to providing millions of Americans with Obamacare relief.

It directs the Department of Health and Human Services, the Treasury, and the Department of Labor to take action to increase competition, increase choice, and increase access to lower-priced, high-quality healthcare options. And they will have so many options. This will cost the United States government virtually nothing, and people will have great, great healthcare. And when I say people, I mean by the millions and millions.

we aim to allow more small businesses to form associations to buy affordable and competitive health insurance. This would open up additional options for employers to purchase the health plans their workers want.

I’m also directing Secretary Acosta to consider ways to expand these associations and these healthcare plans all across state lines. This will create tremendous competition and transformative — in so many ways — change aimed at creating more and lower prices for millions of Americans.

But the competition will be staggering. Insurance companies will be fighting to get every single person signed up, and you will be hopefully negotiating, negotiating, negotiating, and you’ll get such low prices for such great care. Should have been done a long time ago, and it could have been done a long time ago.

This will allow thousands of small business employers to have the same purchasing power as large employers to get more affordable and generous insurance options for their workers. Rich and Leslie Baudry — where are they? Where are they? How are you? Nice to see you. Come on, get up here. Come on. How are you? Nice to see you, Leslie.

They’re here today from Louisiana — a great state. I just left. They had a little hurricane damage, a little, sort of — they got hit, Lake Charles. But we took good care of it, right?

MS. BAUDRY: Absolutely.

THE PRESIDENT: We took good care of it. They’re great people.

They’re small business owners, and they know personally the benefits of association health plans, one of which used to provide health insurance for their employees.

But after Obamacare, they were unable to afford their association plan. So they had a great thing, their employees were happy, and then it ended like so many more. I mean, this is something I hear. Greg, you know exactly what I’m talking about. Greg has been so incredible on this subject. And people had plans that worked, and then all of a sudden they were just totally cut off. And it happened to your company also.

Rich and Leslie have said that they would love, once again, to use an association health plan, and there are millions of Americans who want more affordable options just like them. And now, with this executive order, Americans will likely soon have those options. We will be very happy to provide them to you, and you will be very happy, Rich. I think you’re going to be extremely pleased. If you’re not, you can tell them right now, okay? (Laughter.)

MS. BAUDRY: Thank you so much.

THE PRESIDENT: Thank you, Leslie. Appreciate it. Great to see you. Thank you very much.

In addition, my administration will explore how we can expand something called short-term limited duration insurance. These health insurance policies are not subject to any very expansive and expensive Obamacare coverage mandates and rules. The cost of the Obamacare has been so outrageous it is absolutely destroying everything in its wake.

They were so attractive that, just last year, the previous administration crippled the market in an effort to keep people from fleeing the failing Obamacare plans. In fact, they prevented these plans from lasting more than three months. They will take action to fix that and to make these affordable, flexible plans much more widely available. So we’re going to have a very widely available plan that’s going to cost much less. And from the standpoint of the United States government, we will be very happy, won’t we, Virginia?

REPRESENTATIVE FOXX: We will, Mr. President.

THE PRESIDENT: So they’ll get better and it will cost us nothing. That’s not too bad, right? (Laughter.) We need some more answers like that.

Finally, today’s executive order instructs Secretaries Acosta, Mnuchin, and Hargan to explore how they can allow more businesses to use tax-free health reimbursement arrangements or HRAs to compensate their employees for their healthcare expenses. Currently, only about one-third of small business employees receive coverage at work, forcing millions of workers to enroll in the exchanges or remain uninsured and to pay the individual mandate penalty. Not good. Not good. That is one of the most unpopular things I’ve ever seen in government, I can tell you.

This order takes first steps to make it easier for businesses to help their workers afford high-quality and more flexible healthcare through reimbursement accounts. With these actions, we are moving toward lower costs and more options in the healthcare market and taking crucial steps towards saving the American people from the nightmare of Obamacare.

Today is only the beginning. In the coming months, we plan to take new measures to provide our people with even more relief and more freedom. And, by the way, on another subject, that will include massive tax cuts. We are going to get massive tax cuts, and I believe even Senator Rand Paul, and I know Virginia, Greg, I think you’re with us. But the whole country is looking for these massive tax cuts, and we will get them.

And we’re going to also pressure Congress very strongly to finish the repeal and the replace of Obamacare once and for all. We will have great healthcare in our country.

you all very much. Appreciate it. Thank you. Thank you very much. (Applause.)

THE VICE PRESIDENT: Mr. President, you need to sign it.

THE PRESIDENT: Oh. (Laughter.) I’m only signing it because it costs nothing. (Laughter.)

Well, this is promoting healthcare choice and competition all across the United States. This is going to be something that millions and millions of people will be signing up for, and they’re going to be very happy. This will be great healthcare.

So congratulations to everybody. (Applause.)

(The executive order is signed.)”

1. Remarks by President Trump at Signing of Executive Order Promoting Healthcare Choice and Competition