Providers, insurers see possible disruption from executive order
Healthcare organizations possibly could face more revenue pressure and potential increases in uncompensated care to patients as a result of the executive order signed by President Trump Thursday.
However, the eventual impact of the order may be muted by the fact that it’s not certain when it will be implemented, and how long the start may be delayed by legal challenges, or how insurers will respond to the new market dynamics posed by the plan.
Although the new plan outlined in the executive order may take a long time to rev up, it’s clear that the administration and conservative members of Congress are continuing to take steps to chip away at the underlying foundation of the Affordable Care Act.
“The policies outlined in the executive order are the beginning of the actions the administration will take to provide relief to people harmed by Obamacare,” said Andrew Bremberg, director of the administration’s domestic policy council. “You should expect additional actions coming from the administration in months to come.”
After Congress was unable to pass legislation to repeal and replace the ACA, Trump took matters into his own hands, issuing an order that intends to expand health insurance options for some Americans—but some critics say the approach could undermine coverage for those who rely on Obamacare coverage.
The order directs federal agencies to take action through rule-making processes. New rules would be aimed at enabling small employers, trade groups and others to band together from across the country to create “association health plans” that could buy insurance outside of Obamacare. These plans would not have to follow rules set out by the ACA requiring health plans to cover standard benefits.
To allow these new groups to be created, the administration is already exploring steps to change interpretations of ERISA, a wide-ranging federal law that covers workplace benefits.
The order also calls for expanding the availability of low-cost, limited, short-term health insurance, and it would enable individuals to use tax-advantaged health savings accounts to pay for healthcare expenses. This also could affect the ACA if the administration follows through with plans that enable insurers to sell stopgap policies that don’t cover pre-existing conditions or cover other benefits now required under the ACA.
The order also asks federal agencies to study other steps states and the federal government can take to expand health plan options and reduce premiums, with the ultimate intent of increasing insurer competition. Conservative Republicans have long used the fact that insurers are pulling out of markets, limiting consumer choice, as an indication that the ACA stifles competition.
Under the full plan envisioned by the executive order, “The competition will be staggering,” Trump claimed on Thursday. “Insurance companies will be fighting to get every single person signed up. Today is only the beginning.”
However, if the order’s premise is that insurers will be anxious to offer coverage to others beyond current geographical orders, the foundational premise is likely flawed. For example, six states have enacted laws allowing health plan sales across state lines, but currently no insurers have taken up the opportunity to do so, according to a new report by the National Conference of State Legislatures.
In fact, current trends among insurers are to limit the size and scope of their networks, because costs are higher to manage far-reaching networks that encompass a large number of care providers.
Big networks also tend to have higher costs for consumers, according to research released last week by the Kaiser Family Foundation. The report, which studied the size and composition of Medicare Advantage plans’ physician networks, concluded that broad network plans tended to have higher average premiums than “narrow” network plans. Insurers create narrow networks, picking and choosing providers to include in them, to enable greater control over the costs and quality of care provided to enrollees in the plan, the foundation’s report concluded.
Reaction to Trump’s plan has been limited, as organizations assess the likelihood that federal agencies will wholeheartedly take steps to pursue the new approach. Past executive orders have not always been enthusiastically followed.
Some industry observers say it could take months for agencies to get past legal and regulatory roadblocks and strong insurance industry opposition. They predict the earliest impacts might be felt in mid-2018.
Health insurers were quick to respond to the potential negative effects of the order.
“Health plans remain committed to certain principles—we believe that all Americans should have access to affordable coverage and care, including those with pre-existing conditions,” said Kristine Grow, senior vice president of communications for America’s Health Insurance Plans (AHIP). “We believe that reforms must stabilize the individual market for lower costs, higher consumer satisfaction and better health outcomes for everyone. And we believe that we cannot jeopardize the stability of other markets that provide coverage for hundreds of millions of Americans.
“We will follow these principles … as we evaluate the potential impact of this executive order and the rules that will follow,” Grow continued. “We look forward to engaging in the rulemaking process to help lower premiums and improve access for all Americans.”
In addition, legal challenges may loom for the order. In recent weeks, various attorneys general, most notably New York’s Eric Schneiderman, have threatened to file legal action against the federal government to intervene if federal action would negatively impact state residents’ healthcare coverage.
Another early reaction to Trump’s order from a risk-based organization was decidedly negative.
“We are thoroughly disappointed that after the American people’s voices were heard and Congress decided not to undo all of the critical progress made under the Affordable Care Act, President Trump has decided to continue threatening this progress instead of supporting efforts toward bipartisan legislation that would fix ongoing issues in the healthcare system,” said a statement from Jeffrey Hulburt, president and CEO of Beth Israel Deaconess Care Organization, a value-based physician and hospital network and an accountable care organization.
“The executive order signed today by President Trump threatens the ability for countless Americans—especially those most in need of quality healthcare—to secure it at a reasonable cost, and with all of the benefits they truly need, Hulburt added.
“As an ACO that manages care for all kinds of patients—healthy and sick, young and old, and everyone in between—we know that a stable insurance market and universal access to health insurance are absolutely imperative to ensuring all Americans have access to affordable, quality coverage. While far from perfect, the current healthcare system provides more access, affordability and quality health coverage than we have ever seen before.”