There’s a fundamental disagreement in healthcare policy: One side believes that the government must plan and control the behavior of all actors, including consumers, insurers, even providers. The other side believes that individuals know better than regulators what choices in care and coverage are best.
With President Trump’s executive order, President Trump signals that he agrees with the latter, and seeks to offer relief to American small businesses, workers, and families from the unfair high costs, and lack of choice in insurance plans created by the Affordable Care Act.
The purpose of this EO is to give people and business new coverage options and ways to obtain insurance, and by making insurance more affordable, helping more people get covered.
Defenders of the current government-controlled system predictably warn that any change that offers an escape hatch from the ACA will “destabilize markets.” Freedom is dangerous, folks.
What does it say about the ACA that so many are anxious to escape in the first place?
A look at the sobering reality of the ACA exchanges, where consumers are supposed to go and seek insurance policies, can answer that: Today about 30 percent of exchange consumers have only one insurance carrier available, now that the ACA has decimated the market.
It would be hard to destabilize things further, given how many millions are already opting out entirely only to go uninsured and pay a penalty. They’d rather do that than pay premiums for ACA plans (which have increased 105 percent in just three years) because ACA plans hardly offer protection: narrow networks and high deductibles mean little value.
The Trump executive order aims to correct many of these harms: Instead of no choice, more competition. Instead of high costs for little value, lower costs for solid coverage. Instead of a choice between ACA plans and no plan, some new options.
For small businesses, the executive order can allow them to bind together as associations (so long as the companies are in the same business), to purchase health plans. This will help create a fairer playing field with larger businesses, who for a long time have had a competitive advantage as insurance consumers due to their large and varied pools of employees.
This idea is not new: In fact the House passed legislation to the same effect in March of this year. The bill received four votes from Democrats. And Senator Rand Paul pushed the idea in the Senate over the summer, without success.
For consumers in the individual market – the sector most devastated by the ACA – the most important change in the executive order is the expansion of short-term insurance plans. Typically meant for people between jobs or otherwise in transition, these plans became more popular under the ACA, because consumers were attracted to their lower premiums (about one-third the premiums of ACA plans).
They are not compliant with government rules, containing all the bells and whistles that Washington D.C. has determined a must. But clearly, this type of insurance is attractive to consumers looking for a way out of the ACA’s oppressive and costly regulations. The Obama Administration took steps to squash short-term plans by limiting them to 90 days, a move that ironically hurts consumers with pre-existing conditions the most (consumers would have to undergo underwriting every 90 days). Trump’s executive order can reverse this.
Why did the Obama Administration seek to destroy these short-term plans? Possibly, it was a political effort to save the ACA, putting politics ahead of people. Or, more charitably, it was out of concern that consumers just can’t be trusted to buy the right kind of plan.
And this is where the Trump Administration is fundamentally different. President Trump is putting people ahead of politics in this executive order and trusting Americans to determine what health insurance plan is best for them. That’s a big step in the right direction.