What Does Trump’s Executive Order Against Obamacare Actually Do?

What Does Trump’s Executive Order Against Obamacare Actually Do?

By Margot Sanger-Katz

Donald J. Trump ran on a campaign promise to dismantle the Affordable Care Act. So it should not come as a surprise that he has signed an executive order urging his administration to fight it as much as possible.

But that order, alone, won’t allow President Trump to unwind the sprawling health law known as Obamacare.

Mr. Trump and Republican leaders in Congress are engaged in negotiations about legislation that might substantially undo or replace the health law. Even before the inauguration, Congress took a first step toward gutting major provisions.

But as that process underscores, major changes to health policy will require new legislation. The Trump executive order should be seen more as a mission statement, and less as a monarchical edict that can instantly change the law.

Mr. Trump has sent a strong signal that he intends to fight the health law, but he sent signals that were strong on the campaign trail, too, just in less legalistic language. And the order, crucially, notes that agencies can act only “to the maximum extent permitted by law.” (How the Trump administration interprets those permissions, of course, is yet untested.)

The order spells out the various ways that a Trump administration might fight the parts of the health law until new legislation comes: by writing new regulations and exercising discretion where allowed. Regulations can be changed, but, as the order notes, only through a legal process of “notice and comment” that can take months or years.

On matters of discretion, the administration can move faster, but there are limited places where current law gives the administration much power to quickly change course.

How much of the order is bluster and how much it signals a set of significant policy changes in the pipeline is unclear. The order was not specific and did not direct any particular actions.

“Right off the bat, what do they do — something incredibly cryptic that nobody understands,” said Rodney Whitlock, a vice president of M.L. Strategies, a Washington consulting firm. Mr. Whitlock was a longtime health policy aide to Senator Chuck Grassley, a Republican from Iowa.

What Does Trump’s Executive Order Against Obamacare Actually Do?
President Donald J. Trump signing his first executive order in the Oval Office on Friday, regarding the Affordable Care Act. The move should be seen as more of a mission statement. Credit Doug Mills/The New York Times

The easiest way for the Trump administration to undermine the health law would be to stop defending a lawsuit brought by the House of Representatives. That suit said that the Obama administration lacked the authority to pay certain Obamacare subsidies. A lower court ruled for the House, meaning that by simply withdrawing from the appeal, the Trump administration could start a process to eliminate those subsidies and cause a collapse of the insurance market. Mr. Trump’s order said nothing about that policy choice.

Another important area of discretion has to do with exemptions to the law’s unpopular individual mandate to obtain insurance. Under the law, all Americans who can afford it are expected to obtain health insurance, unless they have experienced some hardship that would make it impossible. People who feel there has been such a hardship can apply for an exemption, and employees in the Department of Health and Human Services and the Internal Revenue Service can decide on their case. Under a Trump administration, it might become easier to claim hardship and get out of the requirement to buy insurance.

But people seeking those exemptions will still have to apply for them, in writing, and can do so only at particular times of the year.

Current law requires them to provide documentation supporting their claim that they have recently filed for bankruptcy, for example, or been evicted, and they must legally attest to their honesty. The Trump administration could create new categories of hardship, but that would take time. And rules that effectively eliminate the requirement would almost certainly result in litigation.

“It’s not a hardship to have to comply with the law, almost by definition,” said Timothy Jost, a professor of law at Washington and Lee University. Mr. Jost, who supports the health law, has examined the underlying regulations in detail.

Defanging the individual mandate could have significant consequences for the individual insurance

markets. If fewer healthy people buy insurance, the costs of insuring everyone else will rise, leading insurance companies to raise prices or flee the market.

Last week, the Congressional Budget Office published its estimate of what would happen under a law that eliminated the mandate and some other provisions: 18 million people would lose their insurance next year alone. It’s possible that insurers will look at the language of the order and get skittish, setting off a market collapse next year. But the order itself doesn’t yet change any rules. The health and human services department and the I.R.S. will have to take further action.

“Is this mostly a symbolic gesture or a signal that they intend to take apart the law piece by piece to the extent they can?” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a health research group. “At a minimum, this creates a lot of uncertainty for insurers at a pretty critical time.”

The order directs the administration to give states more autonomy in directing health policy. And there’s a clear mechanism for that: Medicaid law provides a process in which states can waive many of the program’s usual rules to attempt “demonstration projects.”

Administrations have latitude under the law to decide what sort of new programs qualify. Mr. Trump’s selection for the administrator of the Centers for Medicare and Medicaid Services, Seema Verma, has been an innovator in pushing this process in more conservative directions. Her selection, even more than the order, was a sign that the Trump administration would become more open to new Medicaid rules, including possible work requirements to obtain coverage, or premiums even for very poor Americans.

But, as with the exemptions, there is still a process for such policy changes. States must submit detailed applications for waivers for the rules, and there is a legal review process that typically takes months.

Mr. Trump recently promised that his team was developing a health care plan far better than the Affordable Care Act, that would insure more people and lower their costs. For people who heard that and thought Mr. Trump had gone soft on Obamacare, his executive order may come as a shock. But nothing in the order changes the law on its own. Whether Mr. Trump’s intention is a smooth transition or a rapid disruption in current policy will be determined by what comes next.