Sen. Paul says Trump order will lead to health-insurance access for millions; Rep. Yarmuth says it will lead to 'junk plans'

After signing the order, Trump got a thumbs-
up from Paul. (New York Daily News photo)

By Melissa Patrick and Al Cross
Kentucky Health News

With Congress stymied, President Trump took two steps to undermine the Patient Protection and Affordable Care Act, one with U.S. Sen. Rand Paul of Kentucky at his side.

Trump signed an executive order Oct. 12 to make it easier for people to buy health insurance through associations, increase the length of time a person can be on a short-term insurance plan, and expand the flexibility of health reimbursement accounts.

Hours later, Trump said he would stop paying cost-sharing subsidies that reduce out-of-pocket expenses for low- and moderate-income people with Obamacare plans, about 40,000 in Kentucky.

Critics said both steps would further destabilize the Obamacare market, and several attorneys general, including Kentucky's Andy Beshear, filed suit to restore the cost-sharing subsidies.

Paul, a long-time advocate of association health plans, told reporters in a phone call that allowing individuals to join associations across state lines will increase their purchasing power to bring down the cost of insurance and get more people covered.

"We think we can drive prices down, and then some of the people -- there are 28 million people in our country who still don't have insurance under Obamacare -- then some of those people could find insurance that is less expensive and also that some of the ones on the individual market, the 11 million on the individual market, could find less expensive options also," he said.

U.S. Rep. John Yarmuth

But Democratic U.S. Rep. John Yarmuth of Louisville said the change would let insurers "build a huge market of junk plans, which will return us to the days where American families are one major illness or accident away from bankruptcy. Under these plans, insurers can deny coverage to people with pre-existing conditions, meaning only people who are currently healthy will buy them."

That, Yarmuth and other critics said, will further burden Obamacare plans with less-healthy people, driving up their claims and premiums. "Insurance markets that provide real coverage with real protections will collapse," Yarmuth said. "Welcome to Trumpcare."

Association health plans are likely to be cheaper because they wouldn't have to cover the 10 essential benefits required by Obamacare, such as hospitalization and substance-use disorders.

Asked if association plans would make premiums rise for those left in the more regulated market, Paul said, "The interesting thing is that these new groups will not discriminate. They will take all comers, and . . . group insurance already requires that you can't discriminate based on pre-existing conditions." However, short-term plans allow such discrimination.

He said larger association health plans would have a mix of healthy and less healthy participants, which would keep costs down. However, critics warned that smaller associations could fail if hit with large claims.

Trump's order also allows employers to give workers money to buy their own coverage through health reimbursement accounts, and extends the length of time short-term plans can offer coverage from three months to one year. The order will not affect open enrollment for coverage in 2018, which begins Nov. 1.

Association health plans are usually membership groups based on a profession or business, which proponents say "gives them more clout with insurers," resulting in lower premiums, writes Julie Apleby of Kaiser Health News. She says the big savings from these plans will likely be a result of "bare-bones" policies that Obamacare outlawed. Savings would also come from plans that set premiums based on the health of the group, something not allowed for Obamacare-compliant plans.

Some groups, like the National Federation of Independent Business, have long supported expanding these plans, but other small businesses have opposed them, saying that a small-group market already exists in Obamacare and an influx of association health plans would weaken that market by chasing people out of it.

Consumer advocates expressed concern that "unwary consumers" could be surprised by large medical bills, and the National Association of Insurance Commissioners issued a statement opposing expansion of association health plans.

"The NAIC has long expressed concerns with expanding AHPs in a manner that reduces consumer protections or solvency requirements that promote safe and sound markets," said NAIC President Ted Nickel, who is also Wisconsin's insurance commissioner. "We also have concerns about the impact of such a proposal on already fragile markets."

Cost-sharing reductions

Senate Majority Leader Mitch McConnell of Kentucky issued a statement endorsing Trump's order, but was mum about the president's elimination of the cost-sharing subsidies.

Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) have been working for months on a bill to give states more flexibility in implementing Obamacare and fund the subsidies, which are authorized by the law but have not received appropriations form Congress. President Obama used other means to pay them, but a court has ruled against that, and the case is on appeal.

"Defiant Democrats, convinced they have important leverage, promised to press for a bipartisan deal to restore the money by year's end," The Associated Press reports. "That drive could split the GOP. On one side: pragmatists seeking to avoid political damage from hurting consumers. On the other: conservatives demanding a major weakening of the Affordable Care Act as the price for returning the money."

However, Stephanie Armour reports for The Wall Street Journal, "Trump has privately told at least one lawmaker that the payments may continue if a bipartisan deal is reached on health care, according to people familiar with the matter on Capitol Hill and in the health-care industry." The next distribution of the subsidies was set for around Oct. 20, and the Department for Health and Human Services said they "will be discontinued immediately." Armour notes, "The administration is scheduled to update the court on the status of the case on Oct. 30."

Amy Goldstein writes for The Washington Post that "Trump’s action so close to the fifth year’s sign-up period is sowing widespread confusion among consumers, according to leaders of insurance exchanges and ­enrollment-assistance organizations around the country. Along with other steps the White House has taken since late summer to undercut the ACA marketplaces, they predict this latest move is almost certain to suppress the number of Americans insured under the law next year."

Insurance companies are allowed to withdraw from the government exchanges if the subsidies stop. "So far, no insurers have said they would defect, but concerns remain acute," Goldstein reports. "As the number of companies selling ACA coverage has dwindled in the past two years, an increasing number of the nation’s counties have found themselves with just one participating insurer."

Anthem counties are in pink; CareSource counties are in blue

That is the case in every Kentucky county; about half will have plans from Anthem Blue Cross Blue Shield and half will have plans from CareSource. It is unknown whether those companies factored in their premiums the possibility that Trump would end the subsidies, which he had been threatening to do for months. But they appear to have played it safe; collectively, Anthem's rates will average 41 percent higher than last year, and CareSource's will be 56 percent higher.

The subsidies help reduce deductibles and other out-of-pocket expenses to people with incomes up to 250 percent of the poverty line, about $30,000 for an individual and $61,000 for a family of four.