Health Care

The Health Care Executive Order and Its Impact on Employers

The recent executive order on health care could have very different impacts on the mid-size to large employer market than on the individual to small group market.

President Donald Trump signed an executive order on Thursday, Oct. 12 that would change many aspects of the Affordable Care Act, also known as Obamacare. This order is a way to “start the process” of repealing and replacing Obamacare after several failed attempts to do so through legislation, most recently through the Graham-Cassidy bill. 

The executive order is intended to make lower-premium plans more widely available, according to CBS news. It pushes for the expansion of access to association health plans. It could allow employers in the same line of work to join together to offer health care to employees, even if they’re based in different states. It also pushes for the expansion of coverage for short-term, limited-duration plans that would be available to a person if they lost their job, missed the open enrollment deadline or found themselves in another specific circumstance.

Proponents say this offers more choice and broadens competition. Critics say it could destabilize the individual and small group markets.

“Today’s executive order will allow health insurance plans that cover fewer benefits and offer fewer consumer protections,” said Tom Nickels, executive vice president of the American Hospital Association, in a statement, according to CNN. He added that it could leave Americans who have pre-existing conditions or who need comprehensive coverage without either affordable options or protection against unforeseen illness.

American Medical Association President David Barbe, M.D., said in an email statement that the AMA supports promoting market competition and the concept of association health plans. “We have concerns, however, that the Executive Order’s proposal to expand access to association health plans and allow short-term plans to cover longer time periods may weaken important patient protections and lead to instability in the individual health insurance market,” he wrote.

He added that the AMA looks forward to working with the Administration as regulations are drafted and issued to ensure market stability, meaningful coverage and adequate patient protections.

For most large employers and their employees, this executive order will have no effect on health coverage, according to the National Business Group on Health.

“Employees’ coverage is generally heavily subsidized by their employer and they pay their share of premiums using pre-tax dollars, making it very affordable for most employees,” said Steve Wojcik, vice president of public policy at NBGH, in a statement. “As for smaller employers and some large employers, the proposed changes may make it easier for employers to afford coverage and to help their employees pay for coverage if they buy it on their own.”

It’s important to take the executive order in context, said Janet McNichol, HR director for the American Speech-Language-Hearing Association, a professional association for speech-language pathologist and audiologists. Health care law is still evolving, and there are a lot of unknowns, she added.

“I’m hopeful that as these changes move forward many people will weigh in during the public comment period and that will influence the outcome. Or maybe this will prompt a change in the discussion on the Hill that sends us down a different path all together,” said McNichol in an email interview.

She agreed that the proposed changes will probably not have much of an effect on mid-size and large employers, although they could give small employers more options to help their employees obtain coverage by funding an HRA or seeking coverage through an association health plan that they don’t have now.

For individuals themselves who stay in the ACA marketplace, the changes proposed in the executive order are likely to drive up the cost of coverage as they pull healthier people out of the ACA marketplace, she said. “The potential for destabilization concerns me but doesn’t really impact employer provided coverage,” she said. “Ending the cost sharing subsidies would have a much greater negative impact in this regard.”

The executive order is not effective immediately, and for the time being nothing has changed. “It directs the secretaries of labor, health and human services, and treasury to consider coming up with some new rules or guidance. It’ a first step,” said Kaiser Health News senior correspondent Julie Appleby in a Facebook live video. “They’re going to consider if they want to change the rules, and then they’ll come back with these rules, and there’ll be further discussion.”

Andie Burjek is a Workforce associate editorComment below or email editors@workforce.com.