President Donald Trump signed an executive order directing agencies to allow for the use of association health plans and broader short-term health insurance.
President Donald Trump on Thursday signed an executive order to unwind parts of the Affordable Care Act, taking unilateral moves after Congress was unable to overhaul the US healthcare system through legislation.
The order calls for allowing so-called association health plans and short-term insurance plans, and it includes broad language instructing various departments to look at ways to reduce insurance costs.
Trump made it clear during a ceremony where he signed the order that the action was designed to undermine and start to unravel the ACA, the healthcare law also known as Obamacare.
"We've been hearing about the disaster of Obamacare for so long — in my case most of it outside in civilian life and a long period of time since I started running and for a long time since I became president of the United States," Trump said. "I just keep hearing repeal, replace, repeal, replace. Well, we're starting that process."
The order directs the relevant agencies to craft the outlined changes through regulations, which are subject to the normal approval process. This means they would most likely go into effect for the 2019 insurance year at the earliest.
Association health plans allow people in the ACA's individual or small-group insurance exchanges to pool together to purchase insurance at a more favorable rate. These plans would also not be subject to certain Obamacare regulations, which could help make them even cheaper for people participating, The Wall Street Journal previously reported.
Additionally, the order instructs the Labor Department to look into allowing the sale of these insurance plans across state lines. Trump has long espoused this idea, but there are doubts about whether it would bring down costs.
Short-term insurance plans are cheap but provide little coverage. The ACA prevents people from buying these plans that offer coverage for more than 90 days, but the order calls for extending that to up to a year.
Both aspects of the executive order appear to be targeted at allowing healthier, younger people to obtain insurance for less than the cost of plans on the Obamacare exchanges. Trump said this would allow "millions of people" to get cheaper health insurance.
Experts say that while the changes outlined in the order could allow some healthy people to get cheaper, more deregulated plans, older and sicker people getting insurance through the Obamacare exchanges could be left behind.
As the percentage of sicker people in the exchanges increases, so does the cost of insuring them, which translates into insurers charging higher prices for plans.
"Loosely regulated association plans could charge lower premiums to healthy people, effectively leaving ACA marketplaces as high-risk pools," tweeted Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan health-policy think tank.
Levitt continued: "With this executive order healthy people could pay less for insurance, but middle-income people with pre-existing conditions pay more."
The order, however, appears to call for allowing only small businesses, not individuals, to use association health plans. This could mute some of the negative effects on the exchanges since it would apply to fewer people in the individual insurance marketplace.
In the wake of the collapse of Republicans' attempts to pass healthcare legislation, Trump had signaled over the past few weeks that he would consider both bipartisan deals and executive action to reshape the ACA's insurance markets.
After holding a call with Senate Minority Leader Chuck Schumer last week, the president on Saturday tweeted about the call and a possible healthcare deal, then reiterated that to reporters as he departed the White House for an event in North Carolina on Sunday.
Schumer immediately hit back at the executive order on Thursday, saying it would result in worse coverage for many Americans.
"Having failed to repeal the law in Congress, the president is sabotaging the system, using a wrecking ball to single-handedly rip apart our health care system," Schumer said in a statement. "This executive order is just the latest in a series of steps he has taken to sabotage the health care system at the expense of millions of Americans."