October 12, 2017
The President’s Healthcare Executive Order
The President signed an Executive Order today in an attempt to expand access to more affordable healthcare options. A fact sheet on the EO can be found here. The Administration has signaled that they would be taking actions on their own in light of Congress’s failure to pass a bill to “repeal and replace” the Affordable Care Act (ACA). There three main elements of the Executive Order.
- Association Health Plans – The Employee Retirement Income Security Act (ERISA) governs how employers offer health and retirement plans to their employees. This federal statute allows for companies to offer health insurance coverage to their employees located in multiple states. The Executive Order directs the Secretary of Labor to consider a broader interpretation of ERISA so that employers can band together to offer employees health insurance across state lines. The concept at hand is that trade associations would be able to offer this coverage to the employees of their member companies. Proponents of this policy believe creating a large enough insurance pool and selecting which state laws govern the insurance coverage could lead to lower cost insurance options.
- Short-Term Limited-Duration Insurance – The Health Insurance Portability and Accountability Act (HIPAA) created this category of insurance intended to be used in special circumstances such as when a person is switching employers. These plans are not considered individual coverage under the ACA and therefore do not have the same consumer protections. The Obama Administration issued a regulation at the end of 2016 limiting these plans to three months in duration out of concern that these plans were being sold to consumer as individual coverage. The Executive Order directs the Departments of Treasury, Labor, and Health and Human Services to consider expanding coverage through these plans.
- Health Reimbursement Arrangements – Health Reimbursement Arrangements (HRAs) are employer provided accounts to help employees pay for out-of-pocket medical expenses and individual insurance coverage. The Internal Revenue Service allows for a certain amount of pre-tax dollars to be contributed to these accounts. The Executive Order directs the Departments of Treasury, Labor, and Health and Human Services to consider changes to HRAs to give employers more flexibility. While the Executive Order does not direct this outcome, it is expected that the Trump Administration will seek to allow these dollars to be used to purchase more health insurance products.
The federal agencies included in this Executive Order will need to develop policies around these broad directives and issue regulations for implementation. So we will wait for the details of the policies to know how broad these reforms will be and their implications. It is entirely possible that if the Trump Administration is aggressive in their policy changes that the new regulations will be subjected to legal challenges.