President Trump signed an executive order Thursday morning that seeks to weaken aspects of the Affordable Care Act, a move critics say could drive up costs for people with serious health needs.
The executive order asks for federal agencies to expand small businesses’ ability to band together and form associations to negotiate and buy cheaper, less-regulated health insurance. These associations and healthcare options would be expanded across state lines and wouldn’t be subjected to many ACA rules, including requirements for mental health coverage, maternity care, and regulations against charging more or denying coverage to those with pre-existing conditions.
It also seeks to expand short-term limited duration insurance, which provide a limited amount of benefits and aren’t subject to ACA mandates and rules for those with pre-existing conditions. Under the ACA, these plans are limited to three months, intended for people between jobs or moving off their parents’ health plans. The executive order seeks to extend these plans to a year.
The order also seeks to expand businesses’ ability to use health reimbursement arrangements, which allow employers to pay for employees’ medical expenses, outside the regulations of the ACA.
Proponents of the order claim the changes will create more competition among insurance companies and create more insurance options at lower prices. Critics say Trump’s changes will allow healthy individuals to leave the ACA marketplace to buy cheaper insurance elsewhere, leading to increased healthcare costs for those with serious health needs who are on ACA-regulated plans.
“It would essentially create a parallel regulatory structure within the individual and small group markets that is freed from the various consumer protections established,” Spencer Perlman, a policy analyst with Veda Partners, told Bloomberg. “The end result could be a death spiral for ACA-compliant plans.”
Trump said the order was just “the beginning” of his ACA changes and that he will still pressure Congress to repeal and replace the ACA.
“I’ve been hearing about the disaster of Obamacare for so long, in my case many years. Most of it outside in civilian life, and for a long period of time since I started running and since I became president of the United States I just keep hearing repeal replace, repeal replace,” the president said at the executive order signing at the White House. “Well, we’re starting that process and we’re starting it in a very positive manner.”
The executive order will not go into effect immediately. Federal agencies will need to allow public comment before rewriting regulations, which could take months and won’t happen in time for the ACA’s next open enrollment period between November 1 and December 15.