Last Thursday, President Trump issued an executive order modifying the way that the Affordable Care Act is administered. The order has three main effects:
- Small businesses will be allowed to pool together and form Association Health Plans, through which the member business’s employees would receive insurance.
- Short-term health plans, meant to cover temporary gaps in insurance coverage, have their maximum duration restored from 3 months to just under 1 year. This is a return to the status quo of most of the Obama administration.
- Improve the flexibility of health reimbursement accounts, allowing employees to coordinate these accounts with insurance they acquired not as part of a group.
The President also announced that he would end cost-sharing subsidies, which are payments made from the Federal government to insurers to help pay for insurance plans targeted at low-income people. Insurance companies are mandated to provide these plans at certain costs, and the payments are designed to compensate insurers when such plans are unprofitable.
The change would impact Silver-level plans, which make up around 70% of all plans sold on the exchanges. If insurers raised premiums to compensate for the missing subsidies, people at or near the poverty line would see increased Obamacare subsidies to afford insurance; their final premiums, however, would not necessarily increase. People at a certain distance above the line, however, would likely see the premiums they would pay increase for a Silver-level plan. A marketplace death spiral would occur if these rising premiums pushed out enough healthy, paying customers to make the plans held by unhealthy, subsidized customers untenable for the insurance companies.
While the first order seems to just make a lot of noise without much substance, the second is a clear attempt to sabotage the Affordable Care Act and accomplish through negligence what could not be accomplished through legislation.