Trump has a new plan to try to undercut Obamacare

Donald trumpGetty Images/PoolPresident Donald Trump

President Donald Trump on Tuesday tweeted he that he would “use the power of the pen” to make unilateral changes to the Affordable Care Act.

According to The Wall Street Journal’s Louise Radnofsky, Stephanie Armour, and Anna Wilde Mathews, Trump is expected to sign an order allowing the use of association health plans and short-term insurance plans. The order is expected to include broad language instructing various departments to look at ways to reduce insurance costs.

Association health plans allow people in the individual or small group markets to pool together to purchase insurance at a more favourable rate. According the the report, these plans will also not be subject to certain Obamacare regulations, helping make them even cheaper for people participating.

In addition, the order is expected to instruct the Labour Department to look into allowing the sale of these insurance plans across state lines. Trump has long espoused the idea of selling insurance across state lines, but there are doubts about how effective it would be in actually bringing down costs.

Short-term insurance plans are cheap but cover little. The Affordable Care Act prevents people from buying these plans for more than 90 days, but the new order could allow people to purchase them for up to a year.

Both executive orders appear to be targeted at allowing healthier, younger people to obtain lower-cost options than what is currently available in the Obamacare exchanges.

But experts say the order could leave behind older and sicker people currently are getting insurance through the Obamacare markets.

“Loosely regulated association plans could charge lower premiums to healthy people, effectively leaving ACA marketplaces as high-risk pools,” tweeted Larry Levitt, 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.”

That means healthier people would rely on the cheaper, deregulated plans allowed under the new rules. Since sicker people would need more generous plans, they would likely remain in the more regulated Obamacare exchanges.

As the percentage of sick people in the exchanges increases, it would be more costly for insurers in that market. And as costs increase, so too would the prices insurers charge in the exchanges.

With the collapse of the Republican attempts to repeal and replace Obamacare, Trump signalled over the last few weeks that he would consider executive actions to reshape the insurance market as well as potential bipartisan deals.

The president held a call with Senate Minority Leader Chuck Schumer last week, tweeted about the call and a possible healthcare deal on Saturday morning, and then reiterated the possibility of a deal to reporters as he departed the White House for an event in North Carolina on Sunday.

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