President Donald Trump signed an executive order Friday aimed at defanging the Affordable Care Act, also known as Obamacare, giving heads of federal departments more power to delay or grant exemption from regulations associated with the law.
Its immediate effect remains unclear, but we’ve answered some of the most confusing questions.
What does the executive order say?
The first executive order from President Trump reaffirms his administration’s dedication to repealing the Patient Protection and Affordable Care Act, encouraging heads of federal agencies to find wiggle room to “minimize unwarranted economic and regulatory burdens of the Act.”
It tries to do this by giving the Department of Health and Human Services and other agencies leeway in how to enforce the ACA. It also asks heads of various federal departments to give flexibility to the states in their own health care programs “to the maximum extent permitted by law.”
What does the executive order do?
Nothing at this point, said Cynthia Cox, associate director for the program for the study of health reform and private insurance for the Kaiser Family Foundation.
“Any change would have to come from a new guidance that HHS and IRS would issue,” Cox said in an interview. “… It just signals that the administration will be working with the (Department of Health and Human Services) and other agencies.”
The order can’t overturn provisions of the ACA enacted by Congress. But it can give heads of departments that deal with regulations found in the ACA some discretionary leeway when dealing with some of the law’s regulations.
One such example is the individual mandate, which requires Americans who can afford coverage to purchase health insurance or pay a fee. But those who feel they cannot afford either the health insurance or the penalty for lacking it because of a “hardship” can ask for an exemption.
The Trump administration could loosen the requirements to receive a “hardship” exemption, potentially increasing premiums and prompting some to leave the insurance market, Cox said.
How quickly could the executive order have an effect on the ACA?
As it was passed by Congress, much of the ACA can only be overturned if the GOP-controlled legislative branch passes additional legislation.
“Once his Cabinet is in place and once they are able to carry out this order,” Cox said, “we will see more specifics come out.”
Many changes through the executive branch will require a period of public comment referred to as “notice-and-comment rulemaking” before they can go into effect. Cox said that process, which lets stakeholders air concerns or support for proposed regulatory changes, can take a few months.
Health insurance companies have already included government regulations into their contracts for the year, so there may not be major changes in premiums in 2017, Cox said, but the executive order and changes in regulations could impact the price of premiums in 2018.
Insurance companies “will set those premiums in April or May,” Cox said. “The administration wants to make these changes before mid-year so insurers will know the rules of the game next year.”
I still have until Jan. 31 to sign up for the ACA. What happens if I do?
Those who are already insured by the ACA, or plan to sign up before the Jan. 31 deadline, shouldn’t expect any major changes in their coverage due to the executive order in 2017. But the price of premiums could likely rise next year, Cox said.
The executive order enables departments to slow the implementation of a “fiscal burden” on the states or a “regulatory burden” on business. What defines “burden?”
Cox said it is very challenging to determine the exact meaning of what a “burden” is until the Trump administration begins to propose policies.
Still, a weekend interview with a key Trump adviser hints toward the main target of such language: the act’s individual mandate, the heartbeat of the ACA.
Kellyanne Conway, counselor to Trump, suggested he “may” stop enforcing the mandate altogether, during an interview with George Stephanopoulos on ABC News’s “This Week” on Sunday.
“What President Trump is doing is, he wants to get rid of that Obamacare penalty almost immediately,” Conway said, “because that is something that is really strangling a lot of Americans, to have to pay a penalty for not buying government-run health insurance.”
The penalty under the ACA in 2016 and 2017 is calculated in two different ways: either by a percentage of income – 2.5 percent of household income with a maximum of the yearly premium for a bronze plan in the health care marketplace – or per person – $695 per adult and $347.50 per child under 18, with a maximum of $2,085.
An individual pays for whichever one is higher.
Besides the individual mandate, what are some other aspects of the Affordable Care Act that could be affected by the executive order?
▪ Essential health benefits
Cox said one of the quicker changes to the ACA could be the definition of what is an “essential health benefit,” or the minimum requirement for coverage under an insurance plan.
Under the ACA, services like hospitalization and prescription drugs were considered “essential health benefits” for insurance plans in the marketplace.
This could be one of the first changes to the ACA because essential health benefits were a regulation enacted under President Obama, allowing the Trump administration to repeal or weaken the policy through the executive branch.
Weakening requirements for “essential health benefits” could also decrease the premiums of healthy individuals but lead to increased treatment costs for sick individuals, Cox said.
“It makes it so the costs are incurred by sick people or those who need health care.”
Weakening the individual mandate portion of the ACA would also likely push the cost of premiums up and lead many to abandon the health care marketplace altogether, Cox said.
The executive order urges agencies to do all they can to “provide greater flexibility to states and cooperate with them in implementing health care programs.”
Cox said the goal of altering the rules for Medicaid is to nudge states that have not expanded their Medicaid programs to do so. Currently, 32 states and the District of Columbia have opted into the Medicaid expansion, with 19 states choosing not to do so.
On NBC News’s Sunday Today, Conway said Sunday that the pending replacement of Obamacare would make Medicaid a “block grant program.” This means the states will receive funds from the federal government to construct their own statewide Medicaid program as they see fit.
Josh Magness: 202-383-6172; @josh_mag