Trump billed the order as providing “Obamacare relief.” “You’ll get such low prices for such great care,” he said at the signing. “It should have been done a long time ago.” He also said he believes he will get the necessary votes in Congress to do “block grants”—presumably to replace current Medicaid funding—“at a little bit later time.”
Association health plans have traditionally been available for purchase only by small businesses. Short-term health plans can be purchased by anyone, and provide temporary, limited insurance.
Both short-term and associated plans would likely be less costly than the more robust plans sold on Obamacare’s state-based insurance exchanges. But the concern, among critics, is that the plans would cherry-pick the healthiest customers out of the individual market, leaving those with serious health conditions stuck on the Obamacare exchanges. There, prices would rise, because the pool of people on the exchanges would be sicker. Small businesses who keep the more robust plans—perhaps because they have employees with serious health conditions—would also likely face higher costs.
Association plans are exempt from many insurance regulations, like the requirement to cover a slate of medical conditions, known as “essential health benefits.” Short-term health plans, meanwhile, have the ability to charge sick people more than healthy people, to deny people with preexisting conditions, and kick people off the plans if they get sick.
Currently, association health plans must comply with the Affordable Care Act’s provisions protecting people with preexisting conditions and mandating that insurers cover things like mental health and maternity care. This executive order might change that, allowing association health plans to follow much looser rules. It’s not yet clear from the order whether self-employed people are considered “small businesses” and would be allowed to buy association health plans.
There are challenges to expanding the use of association health plans, says Gary Claxton, vice president of the Kaiser Family Foundation. The federal government might have to rethink what qualifies as an “association” or whether states should be allowed to regulate the plans within their borders. This rule change would also be more open to legal challenges.
The far bigger shakeup could come from lifting limits on short-term health insurance. Currently, people on the individual market can only buy a short-term health plan for up to three months, without the option to renew. This order could allow the plans to last up to 12 months and be renewable.
If federal agencies decided to lift the limits on the short-term plans, and to exempt people on them from the penalty for not buying health insurance, Obamacare’s individual market could become destabilized, Claxton says. Healthy people would join the short-term plans when they were healthy, stay on them for a year, and pay little for skimpier coverage. If they got sick, they would be kicked off those plans and onto the Obamacare exchanges, where coverage is expansive but prices would be higher than they are now. Short-term plans “draw in healthy people and spit them back into the marketplace when they’re sick,” Claxton said.