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A new executive order on health insurance may be coming. Here are some thoughts.
If the executive order is as expansive as it sounds, it could severely destabilize the individual and small business insurance markets.
Association plans exempt from the ACA can cherry pick healthy people and make coverage unaffordable for those with pre-existing conditions.
If loosely regulated association plans are allowed, insurers will leave the ACA marketplaces as soon as they can or hike premiums a lot.
It would be somewhat ironic if association plans were allowed to operate across state lines, counter to the goal of state flexibility.
The push for association plans and selling insurance across state lines has always been to undercut state insurance regulation.
Accomplishing the reported aims of the executive order on health insurance would require twisting existing laws into a pretzel.
One key to this executive order may be multiple employer welfare arrangements (MEWAs) in ERISA.
One can imagine using MEWAs under ERISA to allow small business association plans, but it’s hard to imagine that for individuals.
The executive order also reportedly envisions expanding the use of short-term health insurance plans.
Short-term insurance plans can offer inexpensive coverage to currently healthy people, but they exclude people with pre-existing conditions.
If healthy people can enroll in short-term plans and avoid the individual mandate penalty, the ACA marketplaces could collapse.
Anything that creates a parallel insurance market for healthy people will lead to unaffordable coverage for sick people.
Middle class people with pre-existing conditions ineligible for ACA subsidies could be especially vulnerable under the executive order.
You can bet this executive order will get challenged in court, but it could also create lots of confusion going into open enrollment.
