President Donald Trump today signed an executive order that officially puts his administration's weight behind the idea of letting small employers join together to form interstate health coverage purchasing groups.
Another provision could eliminate the current 90-day cap on the duration of short-term medical insurance coverage from a single issuer.
A third could lead to changes in the rules governing employer-sponsored health reimbursement arrangements.
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Trump signed the order during a brief ceremony in the Oval Office.
Health policy watchers have been discussing what were said to be leaked copies of order drafts, and speculating about what might be in the final version, for weeks. Trump himself tweeted that he expected the order to include an association health plan provision.
The White House streamed the signing ceremony for the order live on the web. A recording of the video is available here.
Trump said at the ceremony that the order will direct the heads of the U.S. Treasury Department, the U.S. Department of Labor and the U.S. Department of Health and Human Services to take steps to increase competition and choices in the health care market, and to promote the creation of new low-cost, high-quality health care options for consumers and employers.
"They will have so many options," Trump said. "This will cost the U.S. government virtually nothing."
Sen. Rand Paul, R-Ky., a senator who has argued in the past that some of the major Affordable Care Act change bills debated in the Senate were too weak for him to support, appeared at the signing ceremony to support the order.
Paul called the association health plan provision in the order "the biggest free-market reform in a generation."
"This reform, if it works and goes as planned, will let millions of people get insurance across state lines at an inexpensive price," Paul said.
Trump cited Paul's presence at the ceremony as evidence that the executive order will make the situation better. "When you get Rand Paul on your side, it has to be positive," Trump said.
Here's a look at three facts about the order of possible interest to agents and brokers.
Sen. Rand Paul, R-Ky. (Photo: White House)
1. The order mostly spells out general goals for federal agencies.
In the order, Trump states that his administration will focus on improving regulations in three areas: fostering the creation of interstate association health plans; easing the rules that apply to short-term medical insurance plans; and expanding access to health reimbursement arrangements.
Trump says in the order, for example, that he wants small employers to be able to use interstate association health plans, or health insurance purchasing groups, to be able to enjoy the same benefits that large employers now enjoy when those large employers self-insure.
Trump does not say in the order exactly what he thinks the association health plans would look like, or how he expects the rules governing short-term medical insurance or health reimbursement arrangements to change.
Alexander Acosta (Photo: White House)
2. Trump does give some hints about what he and others in his administration dislike about the current regulations and how the regulations might change.
In the order, Trump does offer some specific advice for his cabinet secretaries.
Interstate Association Health Plans
Trump encourages Secretary of Labor Alexander Acosta to look for ways to support access to interstate association health plans by:
Loosening the rules for deciding what kind of an organization qualifies as an "employer" under Section 3(5) of the Employee Retirement Income Security Act of 1974 (ERISA).
Letting employers join together in health benefits purchasing groups if they're in the same industry, or if they're in the same area of the country.
Short-Term Medical Insurance
In a section on short-term medical insurance, Trump talks mainly about short-term medical insurance policy duration rules.
Until recently, state insurance regulators decided how long a short-term medical insurance policy could last. In some states, a policy could last almost a year.
Drafters of the Affordable Care Act excluded short-term medical insurance from the quality and underwriting standards that apply to major medical coverage.
An issuer of short-term medical insurance can, for example, refuse to sell coverage to people with cancer, and it can cap benefits at $50,000 per year, or leave out benefits for ordinary physician office visits.
A major medical coverage issuer must sell coverage without regard to the applicant's health, provide unlimited annual and lifetime benefits, and provide coverage for a standard "essential health benefits" package.
Under the Obama administration, the U.S. Department of Health and Human Services (HHS), U.S. Department of Labor and U.S. Treasury Department joined together to cap the duration of short-term medical insurance from any one issuer at three months, to reduce the chances that consumers would try to use short-term medical insurance as an alternative to major medical coverage.
Discouraging use of short-term medical insurance as a major medical insurance alternative could protect consumers against unpleasant coverage gap surprises, and it could protect major medical coverage issuers against losing younger, healthier prospects to the short-term medical insurance issuers, Obama administration officials said when they completed work on the regulations.
Up till now, officials in the Trump administration had not talked much about the three-month cap on short-term medical insurance policy durations.
In the new executive order, Trump talks directly about the duration issue.
Trump encourages Acosta, Treasury Secretary Steven Mnuchin, and Eric Hargan, the new acting HHS secretary, to look at short-term medical insurance, and "consider allowing such insurance to cover longer periods and be renewed by the consumer."
Health Reimbursement Arrangements
A health reimbursement arrangement (HRA) is a program that lets an employer make cash available for an employee's health care expenses.
The employer, rather than the employee, owns the value stored in an HRA.
In some ways, that makes HRAs less attractive to employees than health savings accounts, which are owned by the employee, because employers can decide whether departing employees can continue to keep and use any HRA value still available.
For many employees, however, an HRA may be more attractive than an HSA, because an employee can use an HRA with low-deductible health coverage, rather than the high-deductible coverage that must be used in conjunction with an HSA.
In the past, officials in the Obama administration and other administrations have tried to limit employers' ability to let workers use HRA value to pay for individual health coverage. Some health policymakers fear that letting workers use HRA money to pay individual coverage premiums could accelerate small employers' shift away from offering traditional, employer-paid group health benefits.
Trump says in his order that he wants his Treasury, Labor and HHS secretaries to come up with regulations, guidance or guidance updates to make HRAs more usable, to expand employers' ability to offer HRAs to their employees, and "to allow HRAs to be used in conjunction with nongroup coverage."
Calendar (Image: Thinkstock)
The executive order may not have any concrete effect on federal regulations, guidance or procedures, and any changes that do materialize could take many months, or years, to arrive.
Trump notes in the order that his secretaries must operate within the limits of applicable federal law, and within the budgetary and administrative requirements of the federal Office of Management and Budget.
The Labor secretary has 60 days to develop his association health plan proposals.
The Treasury, Labor and HHS secretaries have 60 days to develop their short-term medical insurance proposals.
The Treasury, Labor and HHS secretaries have 120 days to develop their health reimbursement arrangement proposals.
Cabinet secretaries also must put any regulations they develop as a result of the executive order through a public comment period, Trump says.
The politics of the public comment process could be tricky, both for the Trump administration and for the health insurance and benefits community.
In the past, for example, insurers and state insurance regulators have battled employer groups over association health plan proposals.
Short-term medical insurance proposals have led to fights between short-term medical issuers and major medical issuers.
HRA proposals often pit employers, employer groups and benefit plan administrators against insurers and insurance regulators.
Critics of the reform ideas in the executive order typically say they will weaken protections for patients and increase coverage costs, or hurt coverage access, for higher-risk individuals or employers.
--- Read 5 Peeks at the Senate's Small-Group Health Proposal on ThinkAdvisor.