Intending to create ‘choice & competition,’ it may actually do neither
by Naomi Lopez BaumanMs. Bauman is the director of healthcare policy at the Goldwater Institute. Visit goldwaterinstitute.org
While well-intentioned, President Trump’s recent executive order “Promoting Choice and Competition Across the United States” is unlikely to achieve much of either.
Let’s look at the executive order’s three specific areas of reforms: Association Health Plans (AHP), short-term, limited duration insurance (STLDI), and health reimbursement arrangements (HRA). For each, it’s clear that more could be done to give people more options to fit their healthcare wants and needs.
Association Health Plans (AHP)
The executive order allows small businesses to band together to purchase health insurance coverage for employees in the same way that large businesses already do. But this is an arrangement already allowed under the Employee Retirement Income Security Act (ERISA) of 1974, and many small business employees already receive their health insurance and other benefits through this approach. Had the executive order covered individuals and voluntary associations, such as churches, civic groups, and clubs, which do not currently have an option to participate, this change would have had a greater reach.
Short-term, limited duration insurance (STLDI)
Health insurance plans that provide coverage for less than one year are, once again, allowed. These “bare-bones,” short-term plans which are not subject to ACA regulations, including guaranteed issue and pre-existing condition protections, have been popular for people needing coverage for short spells, such as those between jobs and, more recently, for those who wanted insurance coverage but chose not to buy an ACA-compliant one.
Perhaps in response to the rapidly growing popularity of these plans, the Obama administration restricted these plans in October of last year to three months. Since people should be able to select the health insurance coverage that best meets their needs and preferences, this is a positive reform. Unfortunately, it is unlikely to provide broad-based relief to consumers since this order merely returns us to the October 2016 rules.
Health reimbursement arrangements (HRA)
The most promising of the reforms in the recent executive order directs federal agencies to expand the uses of these accounts, which are funded by employers and can be used by the employee to pay for co-pays, coinsurance, deductibles, and other healthcare expenses. But, to date, they have not been allowed to be used for individual market premiums. If allowed, employees might enjoy more freedom to shop for the coverage that best their own needs and preferences.
So what the President should do? Congress is at an impasse when it comes to addressing the long-overdue issue of how to best move forward on healthcare. But there may be a simple solution to quickly bring lawmakers back to the table: Force members of Congress and their staffs to get their health insurance through the Obamacare exchanges, as the law intended.
Because of the “congressional exemption” granted by the Obama administration, lawmakers enrolled in the small business exchange, which was supposed to be restricted to employers with 50 or fewer employees. Had lawmakers and their staffers been forced into the individual health insurance exchanges as the law intended, they would not be able to continue to receive subsidies that pay for much of their health insurance premiums.
Reversing this policy, which allows lawmakers to escape some of the most damaging aspects of the law, would send a very strong message to the lawmakers who supposedly represent us and impose laws by which we must live: If the individual exchanges are good enough for the American people, then they are good enough for the people who work for them.
Americans want – and need – healthcare access, choice, and affordability. But without the legislative votes to either make those changes directly through legislative action or through granting states more flexibility in crafting approaches to meet those goals, there remains little the President can do to directly affect these goals.
Read the executive order in its entirety here.