Trump Signs Executive Order Expanding Time Frame for Short-Term Health Insurance


October 12, 2017

Donald Trump signed an executive order drafted by his administration that could destabilize and eventually dismantle Obamacare. According to people close to the matter, the order would direct three agencies to draft new policies allowing trade associations to offer their own health insurance plans across state lines. Also known as association health plans, the new policies would protect these groups from the healthcare laws outlined by Obamacare. The executive order will also expand the time frame for short-term health coverage.

Reports indicate that Trump plans to sign the executive order this week. Since congressional Republicans have taken any Obamacare repeal and replace legislation off the table, the Trump administration drafted an executive order directing the Department of Labor, the Treasury Department and the Department of Health and Human Services to establish new healthcare regulations. The new regulations would allow more groups to come together and buy so-called “association health plans.”

If and when Trump signs the executive order requiring the three agencies to draw up new regulations, it would provide individuals an opportunity to buy short-term health insurance for longer than what was allowed under former President Obama and his administration. Reports also state that the order changes the definition of “short-term health insurance.” Last year, the Obama administration limited short-term insurance plans to three months.

Some of the options currently being explored are expanding short-term health insurance plans to one year, which would lead to direct competition in the Obamacare marketplace. However, skeptics of the executive order and its ramifications fear the new regulations could lead to healthier, younger policyholders choosing insurance plans offering meager benefits with cheap premiums. This would ultimately leave insurance companies who participate in the Obamacare marketplace with a pool of higher-cost enrollees.

Critics of the upcoming executive order say that if association health plans were free from the rules under the Affordable Care Act, it would erode the marketplace and force insurance companies to raise premiums to cover the additional costs of a pool made up of higher-risk customers. Essentially, healthier people would seek cheaper coverage from association health plans or short-term coverage and drive prices on the Obamacare marketplace higher.

Short-term health insurance plans and association plans do not offer the same coverage options as traditional health insurance plans. For example, there is no coverage for pre-existing conditions and no guarantee of same-cost coverage. Short-term plans normally do not cover other medical care needs, either, such as maternity care or addiction treatment.

Proponents of the executive order say that offering an alternative to Obamacare marketplace plans would lead to more competition and lower premiums. Some argue there is a real need to adopt systems allowing employers to come together to offer employees low-cost health insurance plans made available across state lines.

However, offering an alternative insurance market for people who are healthy could cause coverage for sick people to become completely unaffordable. Since short-term plans do not cover people with pre-existing conditions, there is no choice but for sick people to pay what will ultimately be higher premiums if Trump signs the executive order, according to critics.