President Donald Trump announced on Wednesday that he plans to sign an executive order as
soon as next week that would permit the sale of health insurance across state
lines through association health plans. The order would reinterpret a provision
of ERISA to allow individuals to purchase coverage in another state. This would
officially sanction a proposal that has long been championed by Republicans,
including in many of the ACA repeal/replace reconciliation drafts this year.
Earlier this year, the House of Representatives voted 236-175 to pass H.R. 1101 to permit small businesses to form health plans
that could be sold across state lines. The plans could either be self-insured
or fully insured and the plans would be able to negotiate with providers. The
Senate has yet to take action on the bill, where it is currently awaiting
consideration by the Health, Education, Labor and Pensions (HELP) Committee.
NAHU has long expressed concerns about selling insurance across state lines, due to
issues relating to the stability of the overall market. While we support the
overall objective of increasing consumer choice, we do not believe that this
will address health plan affordability. The vast majority of cost associated
with health insurance is from medical claims paid, which means that, regardless
of where a person’s policy might be domiciled, most of the cost would be
locally generated. In some states that are heavily regulated, a small savings
might be possible due to savings in administrative cost, but overall cost
savings would be negligible. Further, enabling the sale of insurance across
state lines could lead to a race to the bottom as states eliminate consumer
protections to attract carrier participation, which would lower the overall
value of insurance.
The forthcoming executive order on association health plans is expected to be a
short statement with regulatory instructions directed at the Department of Health
and Human Services and other appropriate agencies. It would not immediately
trigger the ability for association health plans to incorporate these types of
sales across state lines. NAHU will work with all agencies named in the
executive order to influence any regulations written for the implementation of
the order to make sure that any rules that are promulgated are done so with the
best interest of the market and not in a manner that may destabilize markets
across state lines.
The executive order would mark the president’s
first major executive action on healthcare since the order issued
on his first day in office directing federal agencies to ease the regulatory
burden of the ACA. Since then, the Centers for Medicare and Medicaid Services, Department of Labor and Treasury
Department have issued requests for information to carry out this order, to
which NAHU responded with detailed comments.