By David Morgan and Susan Cornwell
WASHINGTON (Reuters) - President Donald Trump is ordering federal agencies to undermine Obamacare through regulatory action, a move that could weaken enforcement of the requirement for Americans to buy health coverage and give insurers leeway to drop some benefits.
Trump's first executive order, signed hours after taking office on Friday, directs the federal government to scale back regulations, taxes and penalties under President Barack Obama’s healthcare law, the Affordable Care Act (ACA).
Republican lawmakers, who are working on new legislation to repeal and replace Obamacare, praised the order as showing Trump’s commitment to gutting the program and lowering steep healthcare costs they blame on the law.
Trump did not specify which parts of the program would be affected by his order, and any changes are unlikely to affect the government-funded or subsidized insurance plans covering more than 20 million people in 2017.
Trump’s nominee to head the U.S. Department of Health and Human Services, Georgia Representative Tom Price, has said there was no plan for “pulling the rug out” on millions of Americans’ healthcare as a replacement is designed.
But the scope of Trump's order drives home the uncertainties of that process, healthcare experts said.
"The order could affect virtually anything in the law, provided it is couched as a delay in implementing the law," said Stuart Butler, a senior fellow at the Brookings Institution.
Trump's administration could decide to delay or not enforce the individual mandate, a requirement that Americans buy health coverage if they do not already have benefits from their employer or the government, as well as a similar requirement for employers of a certain size to insure their workers, experts said.
Others say those changes, if not handled carefully, could force insurance premiums higher and make healthcare less affordable for Americans - outcomes that Trump and Republicans say they are trying to avoid.
"The administration has to run a really fine line here," said Dan Mendelson, chief executive of the Washington-based consulting firm Avalere Health. "They're not going on record as saying what they're going to do at this point."
The administration could also alter, or fail to enforce, requirements that insurers cover a basic set of health benefits in all of their plans, from maternity and newborn care to mental health services.
"This could be a signal to the insurance industry that they could offer new products that, for example, didn't include maternity benefits, in order to attract more sales from people who would prefer a slimmer package," said Joe Antos of the American Enterprise Institute think tank.
Republican Lamar Alexander, chairman of the Senate Health Committee, said last week that Price, once confirmed, could relax requirements for U.S. states to get exemptions from the law, as well as make it easier for states to get waivers on the Medicaid health plan for low-income households.
"Allow states more flexibility to determine the essential health benefits ... that's probably the single most important step that could be taken to create a market where more insurers are likely to sell policies," Alexander said.
His committee is one of several in the House and Senate working on repealing and replacing Obamacare.
Three of the largest health insurers – Aetna Inc, UnitedHealth Group Incand Humana Inc – have essentially pulled out of the market offering health insurance to individuals under Obamacare, citing financial losses for covering a population that was sicker than they had expected.
The remaining players include Anthem Inc, as well as insurers that specialize in administering lower-cost Medicaid plans, such as Molina Healthcare Inc.
Ana Gupte, a senior healthcare analyst at the investment bank Leerink Partners, said Trump's executive order could reassure people in the market that Obamacare will be dismantled one way or another.
That could be positive for insurers who would no longer face the law's health insurance tax, she said. But it could negatively impact acute-care hospitals that have seen more customers and insurers that sell policies to state Medicaid programs, which could shrink in size.
"It's clear that Congress is looking to repeal the law and that it's poised to happen with a replacement. This is one more avenue to make sure their agenda is executed," Gupte said.
(Reporting by David Morgan; Editing by Kevin Drawbaugh and Cynthia Osterman)