After Congress failed to pass legislation repealing and replacing the Affordable Care Act, President Trump decided to take matters into his own hands. On Oct. 12, he issued an executive order directing the Department of Labor to write new rules allowing employers to buy health insurance benefits for employees through multi-state, multi-employer associations.
In theory, such multi-employer associations would enable employers—especially small employers—to offer less expensive health benefits by tapping into economies of scale and larger risk pools than they can access now.
The executive order won’t affect health insurance during the 2018 plan year, as the rulemaking process and subsequent public comment period will take several months.
The order contains two basic components: One allowing groups to purchase policies across state lines and one exempting those policies from the ACA’s minimum-coverage requirements.
Also included was a plan to allow more employees to use health reimbursement accounts to buy insurance on their own, instead of or in addition to employer-provided coverage.
Exactly what the new insurance options will look like will be clearer after the affected government agencies develop specific regulations. The Department of Health and Human Services and the IRS will also be involved in rulemaking.
However, some broad-brush elements are clear. Premium costs for many small employers may be lower than they currently are, mainly because plans will not have to cover pre-existing conditions and other ACA essential services, such as pharmacy benefits.
Employers may not necessarily share equally in the premium savings. Associations may be able to rate each employer based on employee age, health conditions and claims history. Thus, employers with older, sicker employees may pay higher premiums for the same coverage as an employer in the same association with a younger, healthier workforce.
Business advocates applauded the executive order, but it was widely panned by the insurance industry and medical groups.