The Leaflet: Executive Order Could Revive Dying Health Care Markets

Published October 20, 2017

Earlier in October, President Donald Trump signed an executive order he says will help improve competition and choice in U.S. health care markets. The order directs the secretaries of Health and Human Services (HHS), Treasury, and Labor to propose new regulations or revise old ones to expand association health plans (AHPs), short-term limited duration insurance (STLDI), and health reimbursement arrangements (HRAs).

Critics of the Affordable Care Act (ACA) cite increased premiums, higher taxes, rising costs, penalties, and reduced insurance options as reasons to repeal and replace the 2010 law. The Centers for Medicare and Medicaid Services projected nearly 50 percent of all counties will have only one insurer participating in the their state’s health insurance exchange, leaving about 30 percent of all exchange participants without any choices. (This problem is especially bad in Alaska, Iowa, Kentucky, Mississippi, Nebraska, Oklahoma, South Carolina, and Wyoming.) In a report published earlier this year, HHS determined average premiums for individual health insurance plans more than doubled from 2013 to 2017, increasing by $2,928, and Alabama, Alaska, and Oklahoma saw their individual premiums triple over that same period.

Trump’s new executive order is one way his administration can enact some of the free-market reforms Congress has repeatedly failed to pass but that pro-liberty policy experts believe will provide many consumers with better options.

Supporters of the order say an expansion of AHPs will allow more small business to coalesce across state lines to purchase group coverage. This could bring greater access to cheap insurance options for small businesses’ employees.

Similarly, supporters argue expanding STLDI would also help make available more affordable and accessible insurance plans. STLDI is not subject to ACA regulations and mandates, and, on average, it costs one-third of even the cheapest Obamacare plans. STLDI offers access to broad provider networks and high coverage limits, and they are especially well-suited for people who are between jobs, have limited insurance exchange plans, or have missed the Obamacare open-enrollment period.

By enhancing HRAs – employer-funded health care accounts – Trump’s executive order will give employees greater flexibility and control over their health care expenses and needs.

Heartland Senior Policy Analyst Matthew Glans, in his recent Policy Brief “Don’t Wait for Congress to ‘Fix’ Health Care,” says in addition to reforms such as those offered in Trump’s executive order, states should take the lead in health care reform: “The failure of Congress so far to repeal and replace Obamacare presents the states with opportunities to develop their own programs offering aid to the poor and disabled in more cost-efficient and -effective ways. Already, several states have had success with this approach. It is time for the other states to take up the interests of their own citizens—those in need as well as the taxpayers who foot the bills—who have been failed by the national government.”

One way states can seize control of health care reform is by applying for Section 1332 waivers, which permit state lawmakers to end numerous unpopular and ineffective Obamacare provisions, such as the individual mandate, employer mandate, and premium tax credits.

State legislatures can also apply to HHS to implement a long list of other reforms that expand supply and reduce prices, including repealing coverage mandates, guaranteed issue, community rating, occupational licensure laws, and certificate of need regulations. They can expand health savings accounts and encourage telemedicine, high-risk pools, and price transparency.

Additionally, states can apply to reform their Medicaid programs using Section 1115 waivers, enacting pro-liberty policies such as work requirements.

States shouldn’t wait for Congress and bureaucrats in Washington, DC to fix their broken health care markets. Instead, they should seize the moment and create much-needed reforms themselves while there is still an administration in the White House willing to allow free-market policy changes. 


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