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Trump Issues Health Care EO; Announces Plans to Halt CSR Payments

Last week, President Trump issued an executive order that will loosen rules and restrictions around the availability of association health plans (AHPs) and low-cost, short-term plans currently curtailed under Obamacare. The order also directs federal agencies to increase tax-free “Health Reimbursement Arrangements (HRA)” – employer-funded accounts to help employees pay for costs associated with their health care. Agencies will now be required to begin the rulemaking process to implement the executive order.

In a separate announcement, the Administration stated plans to immediately discontinue cost-sharing reduction (CSR) payments to insurance companies. The U.S. Department of Health and Human Services (HHS) concluded that it could not lawfully continue the payments without appropriation from Congress.

The President claims that these moves will foster competition among insurers, encourage more people to sign up for coverage, and end the undue profiting and bailout of insurance companies from CSR payments. Opponents of the decisions are concerned that healthier people will be encouraged to purchase cheaper, skimpier plans, which will drive up costs among Obamacare plans offering more comprehensive coverage and ultimately undermine the general risk pool in the exchanges.

Patient and physician groups were quick to criticize the executive order. The American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, American Congress of Obstetricians and Gynecologists, American Osteopathic Association and American Psychiatric Association issued a statement warning against the potential market destabilization that could result from the move. A coalition of 18 patient organizations, including the March of Dimes and the American Lung Association, cautioned that the order would put sicker Americans at risk of being priced out of the market.

States quickly announced plans to sue the President over his decision to end the health insurance subsidies. The lawsuit, which includes 18 states and the District of Columbia, is led by the attorneys general in California and New York. They are requesting a court order compelling the Administration to continue making the CSR payments, arguing that the payments are mandated under current law.

Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) have been negotiating a bipartisan package to stabilize Obamacare’s individual health insurance markets and now face increased pressure to reach an agreement in light of last week’s decisions from the White House. Their effort would likely fund the insurer subsidy payments while increasing flexibility for states to regulate their own insurance markets. It was reported that the plan has received support from the President should Democrats remain supportive of increased state flexibility. Director of the Office of Management and Budget (OMB) Mick Mulvaney, however, has stated that the President will oppose any congressional attempts to restore CSR funding unless he receives something in return – like repeal of the Affordable Care Act (ACA) or money for a border wall. Should the bipartisan stabilization package not succeed, congressional Democrats are also threatening to use must pass legislation to restore the CSR payments – Congress faces a December 8 deadline for passing a year-end omnibus spending bill to keep the federal government running.

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