Health Law

Trump to end insurers' subsidies after signing order relaxing health insurance requirements for some

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President Donald Trump/

Updated: President Donald Trump on Thursday signed an executive order requiring federal agencies to consider rules that expand the ability of small businesses and groups to band together to offer health care coverage that is not subject to the requirements of the Affordable Care Act.

Later in the day, the administration confirmed that the president will end subsidies to insurers that help pay out-of-pocket costs for low-income people, report the New York Times, the Washington Post and Politico.

“Without the subsidies,” the Times reports, “insurance markets could quickly unravel. Insurers have said they will need much higher premiums and may pull out of the insurance exchanges created under the Affordable Care Act if the subsidies were cut off.”

House Speaker Paul Ryan praised the move, saying the Obama administration had overstepped by making the payments without congressional authority.

New York Attorney General Eric Schneiderman said in a press release that a coalition of states is ready to sue to preserve the subsidies. The states had successfully intervened in a suit challenging the subsidies filed by House Republicans; a ruling for the Republicans is on appeal.

The “association health plans” offered by businesses that band together can avoid rules in the ACA that require health insurance to provide coverage for things such as maternity care, mental health services and prescription drugs, BuzzFeed News reports. The change would allow businesses and professional groups to band together across state lines to create plans through a broader interpretation of the Employee Retirement Income Security Act of 1974, according to a White House press release and the New York Times.

The association plans would also be able to avoid limits on yearly and lifetime costs for consumers, the Washington Post reports.

It is not clear if the rewritten rules will allow people who are not employed by businesses that band together to buy health insurance through their plans, CNBC reports. If outsiders are allowed to buy insurance through the plans that provide less coverage, it could reduce the number of healthy people buying insurance on the exchanges, leading to price hikes.

Trump’s order also tells federal agencies to change rules for short-term insurance plans that had capped coverage at three months, a restriction designed to avoid people using the plans as a loophole to avoid ACA requirements. Such policies were intended to be used for people between jobs or youths who are no longer allowed to participate in their parents’ health plans. Trump’s order expands the cap to one year.

Trump’s order requires rulemaking that won’t be completed in time for open enrollment that begins Nov. 1.

Trump said his order is one of the first steps “to providing millions of Americans with Obamacare relief.”

“I just keep hearing ‘repeal and replace, repeal and replace.’ Well, we’re starting that process,” Trump said.

Updated on Oct. 12 to report on Trump’s decision to end subsidies.

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