Republicans are still trying to defuse the ticking Obama Care bomb without blowing themselves up, and on Thursday the GOP cut the first wire: President Trump signed an executive order that could begin to revive private insurance markets. More to the point, Americans may start to have more choices at a lower cost.
One piece of this week’s order directs the Labor Department to “consider expanding access” to Association Health Plans, which would allow small businesses to team up to offer insurance. The purpose is to let trade groups form insurance risk pools across state lines and enjoy economies of scale. Many large companies are freed from state and some federal benefit mandates and operate under a law known as Erisa. Smaller businesses deserve similar flexibility.
More association plans might start to reverse the decline in small business coverage, and a White House fact sheet notes that the share of workers at small firms with employer coverage has dropped to about one-third in 2017 from almost half in 2010.
The order also seeks to expand the flexibility and use of health-reimbursement arrangements, which allow employers to pay back employees for health-care expenses with pretax dollars. This could be a step toward equalizing the tax treatment for smaller businesses that don’t offer coverage and thus don’t qualify for the subsidy known as the employer tax exclusion.
A third part of the order directs cabinet agencies to consider new rules on short-term insurance plans, which the Obama Administration restricted for the mortal sin of popularity. The plans traditionally could run for a year and often cover catastrophic events with relatively broad networks of doctors and hospitals. This can be a lifeline for folks between jobs.
But an Obama rule that took effect earlier this year limited the duration of the plans to 90 days. ObamaCare’s central planners hated that so many people were choosing the short-term options that can cost a third of standard plans. The Obama Administration said short-term plans don’t qualify as “minimum essential coverage” under ObamaCare, though it sure beats the risks of going without insurance.
The short-term market has historically been minuscule, but perhaps demand will be higher now given that average ObamaCare premiums have increased dramatically since 2013. One unknown is how many insurers will participate or what coverage will be included. Presumably the Administration will certify the plans as compliant with ObamaCare’s coverage mandate, though the executive order doesn’t say.
ObamaCare’s defenders are calling all of this “sabotage” and warning about “adverse selection,” in which a more robust individual market will siphon off the healthy customers that prop up ObamaCare’s exchanges. They predict a death spiral of higher premiums for the sick or elderly left on the exchanges.