Trump health coverage alternatives may pose risk to the sick
The White House is working on a plan that could bring more health insurance choices and cheaper options to people buying individual and small business coverage. But the bill for this might be paid by the sick.
Senior administration officials have said President Donald Trump is expected sign an executive order this week to expand the use of health plans offered through associations. These groups already allow individuals or businesses to band together to buy coverage, and Trump’s order could increase their use by making it easier to sell this coverage across state lines.
On Tuesday, Trump tweeted: “I will be using the power of the pen to give great HealthCare to many people — FAST.”
Specifics of the order and any resulting regulation are still not clear. This coverage could wind up costing some shoppers less if the policies don’t have to meet the coverage requirements of individual states or the Affordable Care Act.
But that’s true largely for customers with good health.
A look at how the market might change.
Q: What’s the situation now?
A: Health insurance in the United States falls under a patchwork of regulations. States oversee individual insurance and most small business plans, as well as coverage offered through associations. Health insurance provided by large employers is regulated by the federal government, a distinction that existed long before the Affordable Care Act became law.
State-regulated plans must meet coverage requirements of that state as well as those of the ACA, all of which can add to the price. The ACA requires coverage of broad benefits categories like maternity care, prescription drugs and mental health services. States can insist on other things, like infertility treatments.
Q: What might happen?
A: If the White House lets state-regulated groups fall under federal regulation, a lot could change. Insurance offered through an association could set prices based on a customer’s health, which can’t happen now. It could exclude potentially expensive benefits like prescription drug coverage to knock down the premium or price for coverage.
Federal regulation also would make it easier for associations to offer coverage in several states, which would increase choice. The White House also might loosen restrictions on short-term insurance plans that generally have limited benefits and remain in force for less than a year.
The main theme behind these ideas is deregulating health insurance, said Sabrina Corlette, a professor at Georgetown’s Center on Health Insurance Reforms.
Q: Who does this help and hurt?
A: People who rarely need a doctor and take no regular medications might find cheaper options tailored more to their needs. They wouldn’t have to buy insurance loaded with coverage they don’t use. The same goes for a small business with mostly young, healthy employees.
However, this option could upset a delicate balance needed to control prices. Insurers depend on the money they collect from healthy customers to counter claims they pay for the sick. Without those healthy customers, the cost might rise faster for people with medical conditions.
Small businesses with an older or less healthy workforce also may have to pay more. If, for instance, a bunch of dry cleaners buy coverage through an association, the insurer may set separate prices for each based on employee health, noted Kevin Lucia, another Georgetown professor.
Consumer protection also may suffer. Federal regulators generally have fewer resources for investigating complaints or helping consumers than their state counterparts, said Mila Kofman, executive director of the D.C. Health Benefit Exchange.
Q: When will we see something change?
A: Probably not any time soon. It typically takes government agencies several months to carry out presidential directives, since they generally must follow a notice-and-comment process.
Any regulation also might encounter legal challenges or resistance from parties like state insurance regulators.
The sign-up season for 2018 individual health insurance starts Nov. 1. It is unlikely any changes would happen by then.
Q: Will insurers go for this?
A: Insurers might relish looser regulations that allow for more business opportunities. But this may shake up insurance markets.
Established insurers that dominate markets now may face competition from upstarts created to offer that cheaper coverage that siphons off healthy customers, noted health care consultant Bob Laszewski, a former insurance executive.
How the more traditional insurers react to this remains to be seen.