Power of the Pen: Trump Uses Executive Order to Chip Away at Obamacare

President Trump is off and running with executive orders. Call it the power of the pen. Wikipedia notes Trump has 49 to date. This compares to 354 for Bill Clinton, 291 for George W. Bush, and 276 for Barack Obama. Trump's latest order cuts into Obamacare. Rand Paul helped pave the way.

President Trump signed an executive order Thursday that is intended to provide more options for people shopping for health insurance. The president invoked his power of the pen after repeated Republican efforts to repeal the Affordable Care Act, also known as Obamacare, have failed.

"The competition will be staggering," Trump said. "Insurance companies will be fighting to get every single person signed up. And you will be, hopefully, negotiating, negotiating, negotiating. And you will get such low prices for such great care."

The order directs the Labor Department to make it easier for groups of employers to band together for the purpose of offering insurance. In some cases, groups might purchase coverage across state lines — a move that Republicans have long advocated as a way to lower costs.Trump described his action as a response to reduced insurance offerings and rising premiums in Obamacare's individual market.Broader access to so-called association health plans, or AHPs, is an idea that has been promoted by Sen. Rand Paul, R-Ky.

"Today is only the beginning," Trump said. "In the coming months, we plan to take new measures to provide our people with even more relief and more freedom."Critics argue that the Trump administration has deliberately tried to sabotage the Obamacare exchanges. Trump has repeatedly threatened to withhold cost-sharing subsidies from insurance companies, and he has slashed spending on marketing efforts to bring more customers into the exchanges.

Rand Paul Meets Trump

Business Insider notes the congratulatory signing moment with Paul and Trump was not as smooth as it might have been.

Sen. Rand Paul of Kentucky has a complicated history with President Donald Trump — including attacks lobbed at each other as candidates in the Republican primary and Paul's opposition a White House-backed healthcare bill in September.

On Thursday, the two crossed paths during a signing ceremony for Trump's executive order to unwind parts of the Affordable Care Act, an effort on which Paul and the White House collaborated.Paul didn't exactly look comfortable.

The video of his reaction quickly made the rounds on social media and had even been memorialized in a Twitter Moment on Thursday afternoon.In the video, Paul offers a few perfunctory claps as Trump greets the audience and begins shaking hands.

Though many of the people in the room are smiling, Paul appears stone-faced. He quickly folds his hands together and looks down, shifting his eyes left and right, apparently the only person in the frame whose eyes are not on Trump as the pleasantries continue around him. Noticeably, he never shakes Trump's hand.

"I can say, when you get Rand Paul on your side, it has to be positive, that I can tell you," Trump said, drawing laughter from the room. "I was just saying as he's getting up and saying all these wonderful things about what we're going to be announcing, I said, boy, that's pretty unusual. I'm very impressed."

Winners and Losers

"President Trump is doing what I believe is the biggest free-market reform of health care in a generation," Paul said during a signing ceremony in the White House Roosevelt Room. "This reform, if it works and goes as planned, will allow millions of people to get insurance across state lines at an inexpensive price."

Trump's action will create winners and losers.

According to the New York Times, the National Association of Insurance Commissioners, representing state officials, is against the move.

Business groups such as the National Federation of Independent Business, the National Association of Wholesaler-Distributors and the National Restaurant Association favor the move.

Among consumers, the losers include those with pre-existing conditions. The winners include the young and the healthy.

Those on Medicare may not care at all.

Your view likely depends on which group you are in. One thing is certain, the losers will howl loudly.

Death of Obamacare is Certain

Whatever your view, this action will not fix remaining problems in Obamacare.

The death of Obamacare is certain. It remains to be seen what will eventually replace the current system.

Mike "Mish" Shedlock


Cardiologist here. I apologize in advance for the length of the answer to your question, but it is complicated…

Each thing a doctor does is described by a “current procedural terminology” (CPT) code. Even office visits are “procedures” for the purposes of billing. Many complex procedures require multiple CPT codes to explain everything the doctor did. In concert with the AMA and other professional organizations, each CPT code is assigned a certain number of relative value units (RVUs) the take into account the time and training required for the “procedure”. Each region of the country then has its own multiplier assigned per RVU that takes into account many factors affecting the expense of delivering care in that market. Things like office rent, salaries, etc. The CPT codes, RVUs, and multipliers are all updated yearly. The “Medicare allowable” fee is simply the number of RVUs times the multiplier.

So for your colonoscopy, the CPT code that was likely used was 45373. It has an RVU assigned to it of 3.69, so the multiplier for your region/city is $229. But, Medicare only covers 80% of the allowable fee, so in your case the allowable was 0.8 x $845, or $673. Your secondary insurance picked up the remaining 20%.

When trying to interpret your EOB, keep in mind that if your doctor has to bill 4 CPT codes to adequately describe your procedure, whatever it is, the Medicare allowable fee will be 100% of the highest paying CPT code, but for each additional code the allowable is only 50%. Add those up, subtract 20%, and that is what Medicare will pay.

In most cases, private insurance companies leverage the hard work that Medicare and MD professional societies do to set fee schedules by setting theirs as a multiple of Medicare fees. Typically, this amount is 1.5-2.0 times the Medicare allowable, with occasional outliers. Blue Cross, the largest provider in my area, currently pays 1.4 times Medicare. CMS pays doctors less than what the market should bear simply because they can, and they do it knowing that in most areas private insurance makes up the difference. The RVU and multiple calculations are as nonsensical as CBO calculations. am told there are plans in places like California where the multiples are less than 1. Why any physician would want to participate in a plan like this is beyond me.

Your gastroenterologist billed a fee 3.6 times higher than the Medicare allowable. Since most insurance plans pay 1.5-2.0 times Medicare, this is a little high but not stratospheric. Why do this? Rather than having to pay to update billing software yearly to keep up with a lot of fee schedules for Medicare and different insurance companies, your doctor does like most and just has one fee schedule set higher than the highest paying insurance plan contracted with to avoid underbilling. Insurance companies are not going to pay a doctor one cent over the plan’s fee schedule, but will happily pay less if you bill them less than the contracted amount. If your doctor is lucky enough to contract with a plan or two that pays say 3.2 times Medicare allowable, then the 3.6 multiplier for the fee schedule makes sense.

When considering physician reimbursement amounts, keep in mind that doctors are running businesses or work for businesses. Out of that $845, your doctor’s practice has to pay the rent, the utilities, staff salaries, staff benefits like health insurance and 401Ks, malpractice insurance, etc.

If you think this is complicated, this just scratches the surface of the Byzantine regulations surrounding physician billing. And this is just the doctor side of it. Hospital and facility billing is completely different, with different sets of codes, concepts, rules…and the Chargemaster. Check out the articles in Time from 2013 and in the Atlantic from 2015 for more about facility billing.

Hello Galen,

Thank you for your lengthy and detailed reply. I read it several times and made a copy so I could reread it and try to comprehend the intricacy of the billing system. Byzantine is a very appropriate descriptive name. I can see where billing in the early 1990's started to increase rapidly. Figuring out the codes where a code might have to do for something "out of the ordinary or something that is complex and could fall on more than one code.

@ Galen

Mish: I'm not used to hitting "Enter" and seeing my input. Not sure how I did the other input with paragraphs.

Galen, I have no problems with walking into a Best Buys and paying a "didn't buy it from Amazon later" tax just to support the locals and to glean any useful information that they may know or have observed. I have no problem with supporting a physcian and the skill he or she has learned but the original amount of $3045 sticks out like a "kited" kited check kited in crayon.

I was thinking of a simpler way where a copay is made for each visit such as $10 to an "urgent care", $20 for an office visit or exam, and $50 to the emergency room where the visit is a true emergency ($75 otherwise). Instead of having a deductible, we pay into something like Medicare a percentage of our income or contracted amount. An elected board/insurance would oversee the rest of the billing. The board would work to keep costs down. I still don't see it without its pitfalls. If you could have "carde blanc" what do you see as being workable?

@Galen MD:
Your thoughtful description of complex CPT codes and billing only affirms for me how effectively MDs have been distracted from the big picture.

Except to government bureaucrats, little of today’s US medical billing system makes any sense and “byzantine” does not come close to describing what has effectively become a massive racket where honest physicians busily run a maze as if they were rodents, patients deal with poor service and outrageous billing, and the money changing hands may have little to do with quantity or quality of care (now 20% of the US economy!).

In Doctors vs. Lawyers it appears the Lawyers have run the table so far. Personally, I am hoping the doctors can still make a comeback. I will be cheering when more docs reject all medical “insurance” and instead offer something like the Surgery Center of Oklahoma:

Just checked pricing at Surgery Center of OK see @CautiousOberver comment above. Many surgeries show costs less than common deductible of $14,000 . Makes me wonder why I still keep my policy. $13,000 in premiums to pay for family flu shots seems a bit steep.

@Galen MD -- thank you for the lengthy description of billing procedures... Its scary to think your explanation simplified anything. I hope the blog's readers will take the time to understand the byzantian red tape that emerges from the disaster known as medicare. All those ridiculous codes and rules and kludgey work-arounds needed to get paid by a bunch of inept and uncaring bureaucrats... and you didn't mention the rather long delay for actual payment (an average of 14 months according to Medicare itself, closer to 18 months according to my parent's doctor). How anyone can be stupid enough to think the US government could implement a universal insurance system is beyond me.... but I must bring to your attention that the AMA endorsed Obamacare, so you and every other doctor deserves to suffer. If you don't like it, tell the AMA to stop endorsing a fraud that hurts you almost as much as it hurts your patients