President Trump’s ACA Executive Order

Anyone keeping up with the news recently has probably seen headlines mentioning new Executive Orders executed by President Trump. Very shortly after being sworn into office on January 20th, newly elected President Trump signed an Executive Order beginning to outline his Administrations intent to repeal the Affordable Care Act (ACA).

No-one yet knows how long the law will remain in effect. However it was made clear in the Executive Order that it is “Imperative for the executive branch to ensure that the law is being efficiently implemented”. It also stated that all executive departments should “take all actions consistent with the law to minimize the unwarranted economic and regulatory burdens of the ACA”. The order then mentions that there should be an effort to afford states more flexibility and control in order to create a more open healthcare market.

After the release of the Executive Order, many are still trying to determine what this all means. What will happen to the individual mandate? What does this mean for insurers? Will employers still have to comply with IRC section 6056? What about the exchanges? Before addressing these things it is imperative to first review some key language from the Executive Order itself.

Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.

Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other applicable statutes in considering or promulgating such regulatory revisions.

The executive order may in fact first and foremost be a political play. President Trump ran an entire campaign on the promise of dismantling the healthcare law and replacing it with “Something Fantastic”!  Obviously this lays out the ground work for Tom Prince, Andrew Puzder and Steven Mnuchin, incoming HHS, Labor and treasury secretaries (Respectively).

Currently, none of these gentlemen have been confirmed by the Senate and therefor there will be some time elapse before they can take any action.

When they are in a place to take action there are still many steps that have to be taken first.  For instance if any action is to be taken regarding loosening any rules this will most likely require new proposed regulations. This in turn is followed by a review and implementation period. On top of this the Democratic Party is not planning on “playing nice”. To sum it all up any changes will inevitably take some time. These things typically take a while (possibly years) even way they are noncontroversial.

Another widely mentioned impact of the Executive order would be the issuing of blanket hardship exemptions to all who enroll in coverage. This could be another way of “loosening” the impact of the individual mandate. However while this can be done in theory it is not practical at all. Granting hardship exemptions to all would essentially implode the current healthcare exchanges as carriers must have the individual mandate in order to offset the risk taken on when enrolling those with pre-existing conditions. Again, possible but not likely.

Lastly, many are wondering what this means for the employer mandate and therefore employer reporting. So far there has been no word specifically on this. One thing is for sure, until the Treasury Department announces something different the current law of the land still stands. This means that all employers should be prepared to furnish 1095Cs to employees by early March and also plan to have these filed with the IRS by the March 31st deadline.