Having failed to repeal Obamacare through Congress, President Trump has once again resorted to jabbing holes in the law with his pen. On Thursday, the president signed an executive order that, in theory, could eventually let Americans buy cheaper health coverage that doesn’t meet many of the Affordable Care Act’s basic requirements, potentially rocking the legislation’s insurance markets and driving up costs for the sick. It’s just the latest—and perhaps the most dramatic—step in the White House’s yearlong campaign of sabotage against the law.
This time, however, there are at least a couple ways that states where Obamacare is succeeding and popular can fight back.
Trump’s order won’t change anything on its own. Instead, it simply instructs his cabinet to “consider proposing” regulatory changes that would make it easier for people without much in the way of medical needs to buy inexpensive insurance with limited benefits. Of course, this would undermine the entire premise of Obamacare, which is designed to cross-subsidize the cost of insurance for the old and sick by making younger, healthier Americans buy coverage in the same market—coverage that by design includes services many Americans may not need now but could later.
Trump would try to shred that market in two main ways. First, the executive order would loosen restrictions on short-term insurance. These typically threadbare plans are designed for people who need to fill a temporary gap in their coverage and aren’t required to abide by Obamacare’s various rules and regs. Companies selling them can charge people higher premiums based on their health status and don’t have to cover any of a customer’s pre-existing conditions or the basic suite of essential benefits mandated by the ACA. Some of these plans used to last up to a year. But the Obama administration clamped down on them in 2016, limiting the time they could last to just three months, after it realized the plans were siphoning off young, ailment-free customers from the ACA’s marketplaces.
The Trump administration will likely try to roll back that rule so healthy 27-year-olds who don’t want to spend a lot on coverage could go back to using “short-term” plans as semipermanent insurance. They’d have to reapply every year, true, but that might be a small price to pay for the cheaper rates they’d be paying.
How badly would that destabilize Obamacare’s insurance markets? It may depend on what Trump does about the individual mandate, which requires Americans to buy coverage or pay a tax. Short-term plans don’t count as insurance under the ACA, but many experts assume Trump is planning to relax enforcement of the rule. “If the individual mandate penalty is waived, these plans could really take off,” the Kaiser Family Foundation’s Larry Levitt told me. If so, young people could once again exit Obamacare’s exchanges, leading to higher premiums for the (again, in all likelihood older and sicker) people who remain.
The executive order’s second effort to deregulate the insurance market borrows an idea beloved by Kentucky Sen. Rand Paul, and would expand what are known as association health plans. These are insurance pools run by groups of small businesses to provide coverage for their workers. Under Obamacare, these plans have to abide by all the same rules that apply to the individual market. Trump’s health-care team would like to free them from those restrictions so they could offer lower-cost options. And while Thursday order is extremely light on specifics, the administration is at least considering trying to use these plans as a vehicle to effectively deregulate the entire insurance market. Not only would they be able to offer coverage skirting the ACA’s rules, but they could also be sold across state lines and be made available to the self-employed. Were that to happen, an association of personal trainers or midwestern Uber drivers or East Coast freelance journalists could start offering low-end insurance coverage that also draws individuals off the exchanges.
Again, all of this could create quite a bit of havoc in the health insurance markets. And in conservative corners of the country where politicians have been making burnt offerings and praying daily for Obamacare’s demise, elected officials might just let that chaos unfold. But thankfully, states like New York or California that have functioning health-care markets and would like to keep them have ways to muck up Trump’s plan.
To start, there’s a pretty simple way to deal with short-term insurance coverage: Ban it. Or, to be specific, limit its duration to the 90 days that the Obama administration allowed. States are still allowed to have some say over their own insurance markets, and they’re certainly allowed to stop Donald Trump from trying to roil them just to score revenge points against his predecessor. “I don’t see anything that would let the federal government pre-empt states from doing that,” Levitt told me.
The association health plans could pose a little bit of a trickier challenge, since, again, the administration is angling to do an end-run around liberal regulators in Massachusetts or Illinois by letting these things be sold over state borders. The trouble for Trump is that it’s unclear how far he can actually expand these things while staying within the bounds of federal law; making them available to individuals in particular, which is the nightmare scenario for the ACA, could stretch the Retirement Income Security Act past its breaking point. That may be why the executive order was so vague on its precise designs for association plans. And it suggests that if Trump does try to push these plans hard, states that don’t want their insurance markets to unravel could bring a lawsuit that would at least tie Trump’s effort up in court for a few good years. “States definitely have standing [to sue] if their regulatory authority is being undermined and may also have standing if there is damage to their insurance markets,” Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms, told me in an email. Just like Republican attorneys general went to war against the ACA, their Democratic counterparts can try to stop Trump from crumbling it.
One of subtly infuriating things about the Republican Obamacare repeal bills like Graham-Cassidy was that, while they pretended to merely give states the option to chuck the law’s consumer protections, in reality they would have forced many state lawmakers’ hands by cutting the federal funding that makes the ACA work. Here, we have the opposite situation. Trump wants to force deregulation on the states. But as long Obamacare is on the books and its funding is flowing, states where the law is popular can resist.