Medscape offered a good review of Trump’s initial executive orders regarding healthcare. I’m not going to repeat the article word-for-word here — just recap the basic points and what they might mean for you:
- They are largely non-specific recommendations, leaving actual implementation to each agency. Since most of the new Cabinet heads aren’t confirmed as yet, this is going to play out over time.
- The executive order could end penalties for not having health insurance. That sounds good until you realize that it will drive up the cost of health insurance for everyone else. The notion of risk pool is that healthy people balance out the ill. If you allow people who don’t use much health services to withdraw from the pool, the cost burden is born by the smaller number of people remaining. It’s simple math.
- On notion starting to be discussed is the idea of a “high risk” insurance pool for people with chronic health conditions. This was tried in a number of states in the past for both health and auto insurance and failed in both areas. States discovered that they were on the hook for budget-breaking sums and the cost to individuals soared. (See Politz article, in sources, below.)
- States will be given greater latitude to determine who qualifies for Medicare and CHIP assistance and what assistance these programs actually provide. That’s OK if you live in the Northeast or West Coast, and not so good elsewhere.
- Health insurance will be sold across state lines. That’s a questionable benefit:
- It reduces the power of state insurance commissioners, which could be a good thing.
- The impact on the actual cost of insurance is questionable. Take New Jersey, for example. Residents will have more policy choices available, but those policies now sold in Pennsylvania and New York have higher prices than New Jersey allows. It seems unlikely that a carrier that sells in both NJ and PA will bring a lower priced policy from NJ to consumers in PA.
- It will repeal taxes imposed on pharmaceutical companies and insurance carriers.
Bottom line: The initial actions favor insurers and pharmaceutical companies at the expense of consumers. Health insurance prices will increase this year. The Congressional Budget Office estimated that Trump’s actions would double the cost of health insurance over the next 10 years. That may be an underestimate.
However, I don’t suggest running out to buy stock in these companies. The theme over the last decade is that draining consumer wallets is a good way to bring the economy to a halt and, eventually, crash the stock markets. It’s been done before.
It’s time to cut your expenses and save as much as you can.
- Emily Rappleye, “Trump’s executive order on the ACA: 5 things to know,” Medscape. 23 January 2017. http://www.beckershospitalreview.com/hospital-management-administration/trump-s-executive-order-on-the-aca-5-things-to-know.html
- Louise Norris, “Health insurance and high risk pools,” Health Insurance.org, 14 November 2016. https://www.healthinsurance.org/obamacare/risk-pools/
- Karen Politz, “High-Risk Pools For Uninsurable Individuals,” The Henry J. Kaiser Family Foundation, 1 August 2016. http://kff.org/health-reform/issue-brief/high-risk-pools-for-uninsurable-individuals/