Since entering the White House, the Trump administration has promised to make significant changes to the Affordable Care Act (ACA). Initial efforts to try to undo ACA legislation fell short earlier this year, prompting many in the healthcare industry to wonder what the future had in store for the Affordable Care Act
Despite the unsuccessful attempt in Congress, President Trump continued to say that he would do what he could to change healthcare in the United States. This started within the first few hours of his presidency
in January, when he signed an executive order that aimed to weaken the Affordable Care Act.
Then on October 12, the president signed an executive order
that he says will make healthcare more affordable to millions of people, and could pave the way for significant changes around the ACA.
There are some important things to keep in mind. It could take months for the administration to craft new regulations and guidance around changes to the Affordable Care Act and healthcare in general. That means that no laws have changed yet, and the ACA is still the law of the land.
What Does the Executive Order Intend to Do?
The executive order was signed as a way for the current administration to re-start their efforts to undo the Affordable Care Act and update the U.S. healthcare system. While there are many potential outcomes of this order, we will focus on three main areas in this article: Association Health Plans
(AHPs), short-term duration liability insurance
(STDLI), and health reimbursement accounts
Association health plans (AHPs) are an arrangement where small businesses join together through trade and professional associations to purchase health insurance
. The president is directing the Labor Department to study how to make it easier for small businesses to join together through nationwide
AHPs. This could have some pretty significant impacts, especially for small employers (more on that shortly).
Short-term duration liability insurance (STDLI), also known as short-term insurance, are healthcare plans that run on a much shorter period. The Obama administration had limited these plans’ coverage to 90 days. The president is looking to expand the use of STDLI plans, potentially to one year, in the hopes of lower insurance costs.
HRAs, or health reimbursement accounts
, are accounts funded by an employer to cover healthcare services. Growing in popularity amongst employers and employees today, the executive order is looking to modify HRA regulations
, which would allow employers to cover more out-of-pocket expenses and increase the use of HRAs throughout the U.S.
How Will the Executive Order Impact the PEO Industry?
Small businesses make up the majority of PEO clients
, and the executive order is aiming to change how these companies approach obtaining healthcare. The biggest takeaway is that the order would allow more small businesses (and possibly individuals) to join together to buy healthcare coverage through AHPs.
Traditionally, AHPs are overseen by trade organizations and interest groups. Instead, the Trump administration wants to move these AHPs under the same federal insights as large-employer policies. This would allow small employers to buy health insurance across state lines, which could give employers in the same industries more flexibility to find healthcare plans at lower rates.
However, some are worried that the executive order would allow AHPs to offer plans with lower premiums, but less benefits. This could lead younger, healthier customers away from ACA coverage, which would lead to much higher premiums for those left in the exchange for health insurance.
In addition, the regulatory switch could also allow associations to deny coverage or set plan rates based on the medical history of a group. This means that employers with a younger and healthier workforce would get lower premium rates. It could also mean that small businesses who are unable to join an association could face significant premium hikes.
We have already mentioned short-term insurance and how the executive order could change them moving forward. The Trump administration is looking to expand short-term insurance plans so that consumers have a cheaper alternative than what can be found in the ACA marketplace.
However, such short-term plans are currently exempt from most insurance rules, meaning plans can reject or charge significantly higher prices for customers with pre-existing health conditions. These plans usually cover fewer benefits and charge much higher deductibles. However, this means these plans are much cheaper than what is offered through ACA.
If the Trump administration does raise the maximum length of these plans to around one year, experts are concerned it would lead to more people buying short-term plans. This would lead to major rate hikes to those who remain in the ACA marketplace.
Stay Up-To-Date as More Updates Are Announced
It’s important to keep in mind that it will take months at a minimum for the current administration to create new regulations around these proposed updates. However, we should expect to hear news and updates at any time, so it’s important to stay on top of what is happening in the healthcare industry. It’s also worth noting that there may be more changes coming to the Affordable Care Act in the coming months and year. Don’t hesitate to reach out to your insurance broker should you have any questions or concerns about these and other healthcare changes
Want to learn more about PEOs? Check out our eBook, How Well Do You Know PEO? This eBook provides an overview of the PEO industry as well as helpful information for brokers and employers!