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    Opinion: Trump’s executive order will have limited impact on insurance market


    On October 12, President Trump signed an executive order to improve competition in Obamacare markets. Section 1a of the Executive Order seeks to “to facilitate the purchase of insurance across State lines.”

    While many analyses of Section 1a of the executive order cite doom and gloom for health plans,   four tenuous contingencies all must take place in order for the executive order to have more than a limited impact on the individual health insurance market during the current presidential term.   

    Here are the four scenarios that must occur for the theoretical case in Figure 1 to take place:

    1. Regulations must be coordinated, well-crafted, and timely

    An executive order itself has no regulatory power, therefore, there will be no immediate changes in any market right away.  Changes will commence as a result of the formal regulatory process and will require a combination of the Department of Labor, Department of Health and Human Service and the Department of Treasury regulation. 

    Why this could be problematic:

    Based on personal experience in the development of cross-departmental regulations, this type of regulation requires far more coordination than a regulation from a single department and therefore is frequently more time consuming than the six-month minimum regulatory process through a single agency. Generally, the development process for single-department proposed rules can take months or years, but optimistically, it could occur in 60 days.  The NPRM must be available for comment for another 60 days.  The administration must then finalize the rule after the end of the comment period which can take as little as an additional 30 days, but can also take months or years.  Once the rule is finalized its effective date must be at least 30 days in the future.  Overall, it will take a minimum of 180 days or six months for rulemaking to occur, making the requirements eligible for the 2019 plan year.  However, any slippage from this deadline and health plans will have already made 2019 decisions, making the rulemaking first applicable to Plan Year 2020.

    The Trump Administration may not be optimally positioned for success in shepherding a multi-department rule because of leadership vacancies:  

    • The Department of Health and Human Services has a confirmed appointment in seven of 18 key positions including the Secretary position.
    • The Department of Labor has only one confirmed position out of 14, and
    • The Department of Treasury has a confirmed appointment in nine of 28 positions.

    Lastly, due in part to the Trump Federal hiring freeze in place from January 23, 2017 through April 12, 2017, the civil servants that actually develop new regulations are primarily career staff holdovers from the Obama and previous administrations, many of whom developed the original Obamacare regulations and may not be motivated to develop regulations that attempt to undermine markets they helped create. 

    2. States must participate

    If regulations facilitating the purchase of health insurance across state lines are implemented, states are the primary regulators of insurance markets.  All fifty states and the U.S. Territories license insurers and then license each specific product for sale after evaluating whether the product meets benefit requirements, rate setting rules, data reporting standards, marketing requirements, in addition to general oversight through each state’s regulatory authority.  

    Why this could be problematic:

    States value this regulatory authority; only four states elected for Federal enforcement of ACA market requirements in lieu of state enforcement, while 19 states rejected Medicaid expansion.

    It is unlikely that states voluntarily cede regulatory authority to insurers based in other states meaning generally, states would need to be forced to permit unlicensed issuers into insurance markets.

    Next: The final two scenarios


    Adam E. Block, PhD
    Adam E. Block, PhD, is a health economist with nearly 20 years of experience working on all sides of healthcare including research, ...


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