Trump’s new health insurance rules expected to hurt Obamacare
Obamacare will suffer another blow on Tuesday when the Trump administration finalizes plans to make it easier for small businesses and trade groups to band together to purchase health coverage outside of the law’s insurance markets.
The White House is touting the expansion of so-called association health plans — which offer fewer consumer protections than Obamacare coverage — as a much-needed cheaper alternative. The administration will also soon finalize rules boosting short-term plans that offer skimpier coverage than the 2010 health care law.
The new rules, which the Labor Department will release Tuesday afternoon, are an effort to follow through on President Donald Trump’s frequent campaign promise to allow the sale of health insurance across state lines. Critics have warned Tuesday’s announcement will further drive up Obamacare premiums and weaken the law.
“They’ll be able to cross state lines and they will get great competitive health care and it will cost the United States nothing,“ Trump said last fall, when he signed an executive order directing agencies to expand alternatives to Obamacare coverage.
Democrats have decried the Trump administration’s insurance moves as acts of Obamacare “sabotage” that will drive up health insurance premiums for millions in the law’s insurance markets. The rules will come after the Justice Department earlier this month urged a federal court to throw out Obamacare’s popular insurance protections for pre-existing conditions, arguing they are no longer valid after the GOP tax law eliminated the individual mandate penalty for skipping health coverage.
Critics warn the steps will further destabilize wobbly Obamacare markets by siphoning off younger and healthier customers, who are more likely to favor cheaper plans that cover less. The law’s insurance markets have already been beset by skyrocketing premiums and diminishing competition, problems that are likely to grow worse if the customer base becomes even smaller and sicker.
Supporters of the Affordable Care Act also worry that the law’s consumer protections will be eroded under the new rules, since insurers will be allowed to offer skinnier coverage that doesn’t include costly benefits like mental health treatment and prescription drug coverage. Consumers might not be aware of coverage gaps until they require significant medical care and could be left with big, unexpected bills.
Administration officials said the final proposal contains robust consumer protections, including prohibiting discrimination against customers with expensive medical conditions. That could reassure critics but may limit the ability of the plans to hold down costs.
“I think that’s problematic,” said Chris Condeluci, a benefits lawyer who was a top Republican staffer on the Senate Finance Committee during Obamacare’s drafting. “It really sets up many of these [association plans] to fail.”
The new regulations are likely to spark a legal challenge on the grounds that they violate federal labor law and need approval from Congress. Insurance regulators, particularly in states that have embraced Obamacare, are also likely to push back against the changes.