October 14, 2017

Trump’s Executive Order on Health Insurance

First the order has no force of law itself. The order tasks federal agencies to consider some new regulations.

Obamacare is still the law of the land.

These changes, if they happen at all, will take months if not longer to become effective.

What proposed changes does the executive order outline?

  1. Small businesses joining together to form associations: Such plans existed up to the early 90’s. In fact, HalSi Insurance created an association plan for the members of Green Valley Arizona Chamber of Commerce. The Tucson Metropolitan Chamber of Commerce also had a plan for its members, as did many other Chambers of Commerce, and trade specific associations.
  2. Individuals joining together to form associations: This was also possible previously. An example was the plan that BlueCross BlueShield of Arizona had for members of the Association of Realtors.
  3. Insurance plans available across state lines, which could be a promising idea. Previously three companies offered such plans.
  4. Short Term Medical plans: These have existed for decades. About a year ago Obamacare mandated that the maximum length of these policies be shortened to 90 days. Trump’s order would expand the time.
  5. Employers would be able to give employees money to buy their own insurance plans through HRAs (Health Reimbursement Arrangements). This was possible before Obamacare, and it was a wonderful way for small employers to help their employees.

Why did previous Association Plans fail?

  1. Adverse Selection: Businesses with younger, healthier employees, and healthier individuals who could get plans on their own with lower premiums, would not join the association plans. Only businesses and individuals with health issues would enroll in the association plans. Of course, this lead to high claim payments relative to the premiums.
  2. Due to Adverse Selection (above) insurance companies stopped offering association plans.
  3. Many association plans were poorly managed, and were unable to properly administer claims. Therefore, regulations were implemented to protect the association members. These regulations will need to be reversed.

How does President Trump’s new executive order affect your health insurance options?

If you are on Medicare or Medicaid: These changes will not directly affect your coverage

Large employer group health plans: If your health insurance is provided by your employer, and it is a large company, this order will likely have negligible effect on your coverage.

Small Employer group health plans: If your health insurance is provided by your employer, and it is a small business, there may be some changes in the future.

If you have your own private health insurance: Your plan may be affected in the future.

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