Barack Obama, when he was still president, used the boast that if Congress failed to give him what he wanted that he had a pen and a phone to get it anyway. President Donald Trump., stymied twice by Congress in his desire to repeal and replace Obamacare, has decided to use one of those tools to upend the structure of the affordable care act and introduce some free market competition in health insurance. He has signed an executive order that reads like a wish list from conservative health insurance reformers.
What the Trump order does
Trump’s executive order sets up a new system of health insurance that can be bought across state lines and could be purchased by associations of people banding together as a group to enhance their purchase power.
Groups could be trade associations, labor unions, or even groups of self-employed people. The new health insurance policies will be exempt from the mandates of the Affordable Care Act so that, at least in theory, people will only get the coverage they need. The order also revises the rules for short-term insurance of the sort people might buy when they are between jobs.
The debate over what the order will do
Proponents of the executive order believe that it will start to bring down premiums, deductibles, and copays by bringing in free market competition to the health insurance markets. The idea is that the amount and cost of health insurance will be determined by what the market will bear. Insurance companies will compete for customers by tailoring policies to their needs at the lowest price possible.
Opponents of the policy change claim that it will destroy the Obamacare markets by siphoning off younger, healthier customers, leaving the older and sicker with more expensive policies with ever more increasing costs that they cannot afford. Critics also have an issue with which government entities will have oversight of the new plans.
On the other hand, it can be argued that the Obamacare markets are already in a death spiral, with premiums due to skyrocketing once again with double-digit increases for most state markets due for 2018. The young and the healthy are opting out, deciding to take the tax penalty which is often lower than the cost of carrying Obamacare insurance.
Trump is taking something of a gamble by signing the executive order. If he is right and the new regime starts to bring the cost of health insurance down, he will have accomplished something his predecessor failed to do. As a bonus, the case for single payer health insurance will be undermined. If the opposite happens, Trump and the Republicans are in serious political difficulty going into the 2018 midterms.
