Some health insurance plans offered in Washington could get cheaper under President Trump’s executive order signed Thursday, but the state’s insurance commissioner warned that the order could also increase costs for sick people.
At its core, the order would make it easier for insurers to offer plans that cover fewer benefits and could also allow the sale of short-term policies.
Washington’s Democratic U.S. senators issued harsh statements in reaction to the new directive.
“President Trump should not try to open the door to junk insurance,” U.S. Sen. Maria Cantwell said in a prepared statement.
Patty Murray, the ranking member on the Senate Health and Education Committee, derided the president’s order as his worst yet.
“The policies President Trump is announcing today are the latest and worst in his yearlong effort to create Trumpcare by sabotage,” Murray said in a statement.
But Southwest Washington Congresswoman Jaime Herrera Beutler expressed cautious optimism for the directive, which would loosen restrictions on “association health plans” — a type of health coverage the Republican has previously championed.
Trump’s order directs federal agencies to write new rules that make it easier for groups and associations of employers to offer association health plans, which are exempt from ACA regulations. The idea is to allow small businesses to band together and leverage their purchasing power to offer the same kind of coverage large businesses offer their employees.
In Washington, about 400,000 individuals get coverage through association health plans.
“If implemented correctly, the president’s expansion of AHPs could help bring down the costs of quality care for thousands of Washingtonians,” Herrera Beutler said in a press release.
In March, Herrera Beutler successfully sponsored an amendment to a House-passed bill that would allow association health plans to be sold across state lines. Her amendment was supported by the nonpartisan Association of Washington Business, which represents 700,000 employees in the state.
AWB President Kris Johnson said in a statement that the success of Trump’s order will depend on its implementation.
“We hope that Washington’s successful AHP market will serve as a model for the rest of the nation,” he said.
But Washington Insurance Commissioner Mike Kreidler said Thursday that association health plans can also burden sick people with higher costs.
“Trump’s executive order will allow healthier and younger people to pick skimpier, cheaper coverage, leaving the older and the sick people to pay much more. This may lower some people’s costs in the short term — as long as they don’t get sick,” he said.
And Kreidler said that while the central idea behind Trump’s executive order sounds good, the order ignores the reality of how health insurance works.
Some association health plans aren’t required to offer the same essential health benefits mandated by the ACA, such as maternity care, prescription drugs, birth control and trips to the emergency room, Kreidler noted.
Responding to concerns, the White House said participating employers could not exclude any workers from plans, or charge more to those in poor health.
Herrera Beutler has accused Kreidler’s office of using federal law to undermine and restrict association health plans, which have been legal in Washington since 1995.
It’s true that the office has tried to use provisions of the ACA to regulate association health plans in the state, said Stephanie Marquis, spokeswoman for the state Office of the Insurance Commissioner (OIC).
But that’s only because the OIC believed some associations were using individuals’ medical histories to determine how much to charge for coverage, she said Thursday. That practice, known as medical underwriting, was essentially banned by the ACA.
Some association plans increased individuals’ premiums rates by as much as 50 percent the year after they got sick and filed a claim, Marquis said.
“We were arguing that you’ve got to treat all your members the same. You can’t cherry pick them if you want to be a truly large group,”Marquis said.
A court ultimately ruled that OIC lacks the authority to perform rate reviews of association health plans.
Trump’s executive order comes at a time of great uncertainty for health insurers.
Last month, the Washington Health Benefit Exchange certified two different sets of premium rate increases for 2018. The lowest rate increase — a 24-percent spike from the previous year — assumes the federal government will continue to make cost-sharing reduction payments to insurers. If the government stops making those payments, insurers can adjust the original rate to a higher rate that has yet to be approved. OIC will approve final rate increases later this month.
The White House announced late Thursday that Trump is scrapping subsidies paid to health insurance companies that help pay out-of-pocket costs of low-income people.
The administration has also slashed its outreach budget in the run-up to this year’s open enrollment period, which is from Nov. 1 to Dec. 15.
In addition to heightened uncertainty at the federal level, insurers are also increasing premiums to cover rising prescription drug costs, Marquis said.
“The number one cost-driver is prescription drugs and you don’t see anyone taking on Pharma at the national level, which is where it would have to happen,” she said.