"Fed up with failed attempts in Congress to repeal the Affordable Care Act, President Trump on Thursday took matters into his own hands, stopping payments to insurance companies and signing an executive order that could significantly damage the health insurance market and harm millions of people.
Mr. Trump carried out his threat to stop paying insurers to lower the out of pocket costs for low-income and middle-class Americans. The loss of this money, expected to be $9 billion next year, will force insurers to raise premiums and stop selling policies in some parts of the country. Because most people who buy coverage on A.C.A. exchanges also receive subsidies to keep their premiums affordable, this change would actually cost the government money — about $2.3 billion more next year, according to the Kaiser Family Foundation.
Earlier in the day, the president directed his administration to effectively create an alternative health insurance system that does not include the safeguards of the A.C.A. and could sabotage that 2010 law, one of his predecessor’s biggest accomplishments. The president claims that this will help people obtain cheaper insurance. In reality, it most likely will force insurance companies to abandon the A.C.A.’s insurance exchanges and ultimately precipitate a collapse of an important part of Obamacare.
The executive order is made up of two main changes: to expand the use of short-term insurance policies and to make it easier for professional and trade associations to sell health coverage to members across the country. Officials at the Departments of Health and Human Services, the Treasury and Labor will now come up with a rule after seeking public comment over the next several months.
Let’s start with short-term health policies. The Obama administration put in place rules that the policies could last 90 days and were not renewable. They’re currently meant for people between jobs. Mr. Trump is directing his aides to extend these plans and make them renewable, arguing that because these policies tend to be cheaper, this change could benefit millions of people. Short-term plans indeed cost less than yearlong policies, but that is because they are not as comprehensive. For example, many do not cover maternity care, cancer treatment or prescription drugs. And short-term policies often do not pay for treatment for pre-existing conditions, a signature requirement of Obamacare policies.
Mr. Trump also wants to expand the use of association health plans, which have been around for years but have a terrible track record. These plans typically work by insuring the employees of small and medium-size businesses that have something in common. A national plumbers association, say, might offer a plan to all of its members and their employees. These plans are lightly regulated by the federal government and often face little oversight by states because their beneficiaries are spread out across the country.
A 1992 General Accounting Office report found such plans had left nearly 400,000 members and their beneficiaries with $123 million in unpaid medical claims between 1988 and 1991. The Trump administration says it will require these plans to meet some of the requirements of the A.C.A., like protections for people with pre-existing conditions, but it has provided few details.
The combined effect of cutting off the insurance payments and the executive order will be to destabilize the A.C.A.’s individual market, which is used by nine million people to buy health insurance. Younger and healthier people will be tempted to buy a skimpy short-term policy with low premiums and switch to a policy that complies with the A.C.A. only when they need medical care. Knowing that they will no longer receive cost-sharing payments and that Obamacare policies will tend to attract older and sicker people, insurers will probably jack up premiums or withdraw altogether in sparsely populated counties.
State governments, public interest groups and others will seek to prevent some of the damage from the order. There is some hope that they will be able to shape the regulations during the public comment period. If the final rules are still harmful, some groups will most likely file lawsuits.
But Mr. Trump is determined to disrupt Obamacare. His administration has shortened the A.C.A. open enrollment period during which people can buy coverage for next year. Funding aimed at helping people enroll — like money for advertising and health navigators — has been slashed.
Congress must step in. Lawmakers need to finish work on much-talked about bipartisan legislation to strengthen the A.C.A., including by appropriating money for the cost-sharing payments. America’s long-term health depends on it.