After a bitter summer battle over health reform, Congress finally found common ground this fall, recommending pragmatic fixes to stabilize prices and bolster competition in the individual health insurance market.
So it is especially frustrating that President Donald Trump is choosing to ignore these bipartisan prescriptions and instead launch a dubious health reform of his own — one that eventually could leave consumers with worthless coverage and many people with medical needs unable to afford traditional insurance.
The individual market serves around 7 percent of Americans — those who don’t get private coverage through employers or public coverage through programs such as Medicare. On Thursday, Trump announced an executive order to allow individual market consumers to buy coverage through ‘‘association health plans” or through individual “short-term” plans that run the duration of year. This, Trump said, will finally allow these consumers to escape what he dubbed the “nightmare of Obamacare.”
But a reality check isn’t kind to Trump’s initiative, which has received a thorough drubbing in advance from respected organizations such as the American Academy of Actuaries and the Commonwealth Fund. The reason is that the plan rests on a reprehensible foundation: Some consumers will buy garbage health plans that are cheap up front but that often pay out little when someone develops cancer, for example, or has a premature baby requiring intensive care to survive.
The Affordable Care Act, passed under former President Barack Obama, put in place consumer protections to ensure that coverage actually covered care consumers might need. It also ensured that insurers couldn’t turn away those with pre-existing conditions or leave them only with unaffordable choices.
Despite Trump’s high-flying rhetoric Thursday, his executive order isn’t innovative in the least. It simply allows certain types of health plans to operate outside some or all of these vital ACA safeguards and, potentially, state oversight. The plans that would qualify are association health plans (AHPs), which allow people with a common interest, such as a trade, to band together and buy insurance. Short-term plans, which typically are allowed to cover only a few months but could cover a whole year under the Trump change, also would be eligible.
It’s unclear at this point how many consumers would seek or qualify for the coverage. Or how soon they might have this option. Still, this is a door that should not even be cracked open.
AHPs have been tried before with alarming outcomes. Some have been used “as a vehicle to sell fraudulent coverage to hundreds of thousands of unsuspecting consumers,’’ the Commonwealth Fund reported. These plans also have been “marred” by a history of financial instability, with one big New Jersey plan shutting down in 2002 and sticking policyholders with millions in unpaid medical bills.
But it isn’t just consumers who would buy these plans who would be at risk. People with serious medical conditions, meaning they need traditional comprehensive insurance, could see massive increases in coverage costs. If too many healthy people bought skimpy coverage under the new Trump plan, there wouldn’t be enough people buying good coverage through the ACA to spread out the cost of medical care and keep these more comprehensive plans affordable. Insurers would also exit.
The result is that the Trump plan actually could cause the insurance market “death spiral” Republicans have been warning about for years in their ACA criticism. In contrast, Congress recommended solutions that would attract more insurers to the market. One of them, a reinsurance program, is similar to one rapidly launched this year in Minnesota to shield consumers and insurers from the cost of patients with expensive medical needs.
Legal challenges to the executive order are expected and merited. And it will take time for federal agencies to roll out.
Trump’s plan disingenuously suggests there are fast, easy solutions to lower coverage costs without sacrificing care. Americans are ill-served by presidential policy promoting this fantasy.