By David Thornton
Most of the discussion centers around the likely effects of the order while little has been said about the constitutionality of Trump’s executive action. For a party that roundly condemned President Obama’s abuse of executive authority, a big question should be whether Trump has the legal authority to make the changes that he proposes.
The bottom line is that Trump’s Executive Order doesn’t actually make any changes to the Affordable Care Act. What it does do is to order cabinet secretaries to “consider proposing regulations or revising guidance, consistent with law.” In other words, Trump isn’t proposing changes to laws passed by Congress, he is considering changes to regulatory laws enacted by bureaucrats. These changes will be “considered” in three main areas.
First, the president wants to expand access to association health plans (AHPs). Health Affairs notes that these plans are more loosely regulated than traditional insurance plans. They are normally regulated by the states, but can be regulated by the federal government in the case of some national associations. The order instructs the Secretary of Labor to “consider” expanding the definition of “employer” under ERISA to allow more groups to sell AHPs and to “promote AHP formation on the basis of common geography or industry.” To purchase insurance, consumers would have to be a member of the association.
Second, the Executive Order moves to expand Short-Term, Limited-Duration Insurance (STLDI) policies. The order notes that STLDIs are “exempt from the onerous and expensive insurance mandates and regulations” of the Affordable Care Act, but that “the previous administration took steps to restrict access to this market by reducing the allowable coverage period” to less than three months. “To the extent permitted by law and supported by sound policy,” the president directs cabinet members to “consider allowing such insurance to cover longer periods and be renewed by the consumer.”
STLDIs are not considered to be individual health insurance policies and do not have to meet the insurance policy requirements of the Affordable Care Act. The policies are governed by rulemaking agencies of the Department of the Treasury, Department of Labor, and Department of Health and Human Services. Therefore, these departments can amend the rules for STLDIs without going through Congress.
Third, the Executive Order instructs relevant cabinet secretaries to “consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”
HRAs are health reimbursement accounts. They allow employers to contribute money on a pre-tax basis to reimburse employees for health insurance premiums and out-of-pocket expenses. HRAs were created by Congress, but executive branch agencies have leeway in how to regulate them.
President Trump’s decision to halt Obamacare subsidies to insurance companies is not part of the Executive Order, but is on firm legal ground. House Republicans sued the Obama Administration over the subsidies in 2014. In May 2016, a federal judge ruled that Congress had authorized the payments, but had never appropriated money for them. The Obama Administration appealed the ruling, but the decision by President Trump seems to be merely accepting the court’s initial decision and dropping the appeal.
This doesn’t mean that the Trump Administration will be able to stop making the payments. Several states ultimately joined the appeal, claiming that the Trump Administration was not adequately defending their interests. Now 18 states have filed a new lawsuit seeking an injunction against President Trump’s decision.
Because the President Trump’s Executive Order does not change existing law and only instructs cabinet members to “consider” making changes to bureaucratic regulations within the framework of the law, the order is constitutional. It remains to be seen what regulatory changes the various cabinet secretaries will propose, but the changes will probably be much less sweeping than claimed by either right or left-wing pundits.
President Trump’s Executive Order is legal in large part because it doesn’t do much. The president simply does not have much authority to change laws that have been passed by Congress. The decision to stop insurance company subsidies is a more serious threat to Obamacare, but even this is unlikely to take effect until the lawsuit by the states is settled.