This editorial has been updated.
The small bits of good news are that many insurers had planned for an end to the payments, which might dull the impact of his announcement; and as for the order, it merely instructs executive agencies to draw up some new, looser regulations, rather than immediately eroding Obamacare’s protections. But these consolations are overshadowed by the bad news. Not every Obamacare insurer may be prepared to do business without the federal payments they were promised, and many may exit the market, while others will seek to raise premiums. Meanwhile, the executive order may lead to looser regulations soon, and they could devastate the ACA’s carefully regulated marketplaces. Much depends on how reckless the leaders of agencies such as the Labor Department decide to be.
Obamacare’s underlying logic is that covering people who get sick or are likely to become sick, because of their age or preexisting conditions, requires a big insurance pool with enough healthy people to spread risk evenly. Republicans have argued that this system is unjust to the healthy and young, who pay more into the system than they get out of it, and that they can adjust the system to favor the fortunate without harming the unlucky. They are wrong, as analysis after analysis of their various health-care bills showed. That is one reason GOP lawmakers failed to pass the bills. Not taking the hint, Mr. Trump is now trying to undercut Obamacare’s insurance pool by executive fiat, sidestepping Congress.
The president’s executive order instructs the Labor Department to rewrite rules on health-care plans that small businesses can band together and buy into. Instead of being regulated like other Obamacare insurance plans, these association health-care plans would potentially not have to cover a slate of essential benefits. The plans could be cheaper but also useless for sick people. Also, insurers might be able to charge small employers much more for plans if they have older or sicker employees.
The result is that healthy people would end up covered with cheap and scanty association plans while sick people were left in the normal Obamacare market that guarantees them needed benefits. Premiums for those sick people then would skyrocket. The damage would be profound if the Labor Department concluded that individual insurance customers could buy into plans meant for small associations. Then many healthy individuals would exit Obamacare’s big insurance pool.
The president’s plan to enhance supposedly short-term insurance policies is similarly dangerous. Meant as stopgap insurance for people between jobs, these plans are almost totally unregulated — so they can be cheap, skimpy and fairly useless for sick people — but they can run only for three months. Mr. Trump’s executive order could allow them to run for 364 days in a year, enabling healthy people to use skimpy plans as their primary health-insurance policies. Once again, this would pull healthy people out of the Obamacare pool and into cheap, substandard plans, triggering a disastrous escalation in costs for those left behind in the ACA insurance pool.
Mr. Trump constantly criticizes Obamacare’s rising premiums. His Thursday actions threaten to raise them far more — especially for some of the Americans who need help the most.
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