What Does Donald Trump's Executive Order Mean for the ACA?

Will Healthcare Reform Changes Be Legislative, Executive, or Both?

Health insurance helps patients get the medical care they require
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On January 20, hours after his inauguration, President Trump signed an executive order aimed at "minimizing the economic burden of the Affordable Care Act." The executive order notes that the Trump Administration is seeking repeal of the ACA, but that in the meantime, Trump wants federal agencies to be as flexible and lenient as possible in enforcing the provisions of the ACA.

Federal agencies are instructed to "waive, defer, grant exemptions from, or delay implementation of" any provision of the ACA that would place a financial or regulatory burden on states or on "individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications"—so basically anyone involved in the health care system.

In addition, the executive order instructs federal agencies to "provide greater flexibility" to states that wish to implement their own unique health care programs and health care reform.

What Does All of This Mean?

Although the ACA itself is nearly a thousand pages long, there are several thousand pages of federal regulations—mostly from CMS/HHS and the IRS—that have interpreted and clarified various parts of the law, and created guidance where it was needed.

Some parts of the ACA—like hardship exemption details, and the specifics of what is considered preventive care—called for additional federal regulations to work out the details after the fact (for example, that's why women-specific preventive care wasn't sorted out until 2011, despite the fact that the ACA was enacted in 2010).

Changing the ACA itself requires an act of Congress. But changing regulations that have been implemented by federal agencies just requires new federal regulations.It's not as simple as the stroke of a pen, however. The Administrative Procedure Act, which has been in place since the 1940s, governs how federal agencies promulgate rules.

For HHS rules, a draft rule is published, and then there's a required public comment period. At the end of the public comment period, HHS makes decisions based on the public comments and then publishes the final regulations, including details about the comments they received and their responses to those comments. So new regulations don't happen overnight (although it's worth noting that the way the rule-making process is handled may also be changing under the Trump Administration).

But basically, the Trump Administration is telling federal agencies to be as lenient as possible in their enforcement of ACA provisions that result in taxes, penalties, or other burdens. The main issues that have been brought into focus with this executive order are the individual mandate and the flexibility for states to tackle health care reform in a state-specific way.

The Individual Mandate 

The individual mandate requires most Americans to maintain health insurance coverage or face a penalty when they file their tax returns. But there are numerous exemptions to the mandate. Some of them are clearly defined in the text of the ACA, but others—in particular, the specifics of what qualifies as a hardship exemption—were left up to HHS to determine.

Under the Trump Administration, the Department of Health and Human Services could choose to broaden eligibility for a hardship exemption, letting a lot more people go uninsured without facing a tax penalty for doing so (of course, going uninsured is a significant risk that goes far beyond a tax penalty; if you're uninsured and need medical care, you're on your own for the medical bills, and you might not be able to obtain care at all beyond the basic assessment/stabilization that emergency rooms are required to provide).

If the individual mandate is repealed (via legislation) or relaxed (via regulatory action stemming from the executive order) in the near future, the individual health insurance market could be destabilized. Rates would likely climb sharply for 2018, and more carriers would likely choose to exit the individual market entirely.

But repealing or relaxing the individual mandate early in Trump's term would fulfill part of the campaign promise he made to get rid of the the ACA (Obamacare), and would appeal to people who dislike the individual mandate. To clarify, although the individual mandate is certainly one of the less popular provisions of the ACA, it is an essential part of a health insurance system that provides coverage for pre-existing conditions, which the ACA also requires. You can't have coverage for pre-existing conditions without some way to ensure that people remain covered when they're healthy, rather than waiting until they're sick to enroll.

State Flexibility in Health Care Reform

States already have some flexibility under the ACA: 1332 waivers allow states to take an innovative approach to implementing the ACA, as long as they adhere to a variety of guidelines laid out in the ACA. Hawaii was recently granted a 1332 waiver that allows the state to avoid having a small business health insurance exchange, since Hawaii already has a robust employer-sponsored health insurance system mandated by the state.

And several states have used 1115 waivers to implement Medicaid expansion with modifications that differ from the Medicaid expansion called for in the ACA. But under the Obama Administration, CMS has refused to allow some of the more conservative-leaning provisions that have been requested in some 1115 waiver proposals.

For example, several states have proposed a work requirement for able-bodied adults to be eligible for expanded Medicaid (meaning they would have to be working, actively involved in a job search, in school/job training, or taking care of dependent children in order to receive Medicaid benefits). In every case, CMS has rejected proposals like that, and has only allowed voluntary job training programs to be included. But under the Trump Administration, we could see states opting to expand Medicaid (thereby receiving additional federal funding for their state Medicaid program) with a work requirement approved by CMS.

This is just one example; there are many aspects of health care reform on which Republican state legislatures clashed with the Obama Administration, and Trump's executive order gives them more of a clear path to implement reforms in their own way. Minnesota's House of Representatives passed legislation in January 2017 that would allow health insurance carriers to sell plans without a variety of covered benefits that currently fall under the umbrella of mandated essential health benefits. The Minnesota Senate rejected that part of the legislation, however, and it was not implemented. But if similar legislation were to be enacted by other states going forward (assuming the ACA itself has not been repealed) the states would need a 1332 waiver to implement it. The Obama Administration would never have granted such a waiver, but the Trump Administration is much more likely to do so.

It's worth noting here that the structure of Medicaid itself is likely to change under the Trump Administration with eventual ACA replacement legislation. Republican lawmakers are pushing to switch the program to block grants or per-capita allotments, rather than the current open-ended matching commitment that the federal government uses to fund Medicaid.

What Happens Next?

Nearly everything is still up in the air in terms of the future of health care reform. ACA repeal legislation is currently being drafted by four congressional committees. Lawmakers have not yet coalesced around a replacement, although there are numerous proposals on the table (including some that have been newly introduced in the 2017 legislative session, like the Cassidy-Collins bill).

Information from the Trump Administration has been relatively scant and somewhat conflicting in terms of exactly how the executive order will be implemented, but now that most of Trump's cabinet nominees have been confirmed, regulatory action pertaining to the executive order could be forthcoming. 

Some states will take matters into their own hands, passing laws to keep certain aspects of the ACA in place regardless of changes on the federal level. For example, the day after Trump signed the executive order, New York announced state regulations to protect access to no-cost contraceptives and medically-necessary abortions on state-regulated health plans.

For the time being, nothing has changed about your health insurance or the rules governing health insurance. The ACA is still in place, you still have to maintain coverage, health plans cannot use medical underwriting or exclude coverage for pre-existing conditions, and premium subsidies (i.e. premium tax credits) are still available in the exchange to help you afford coverage.

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