President Trump Opens Obamacare Escape Hatch

Image: 

By Heather R. Higgins and Phil Kerpen

From the Wall Street Journal

Just hours after taking office, President Trump signed an executive order directing federal agencies to “waive, defer, grant exemptions from, or delay” any provision in ObamaCare that burdens individuals, families, insurers—and nearly anyone else who could be affected. This order takes full advantage of the vast discretion built into the law that President Obama used to virtually write ObamaCare on the fly. Mr. Trump’s move is much more than a symbolic gesture, and it is the first step toward repealing ObamaCare.

While the details will likely wait until after Dr. Tom Price is confirmed as Health and Human Services secretary, the Trump administration has already moved toward making it easier for Americans to buy health insurance plans prohibited by ObamaCare.

The executive order’s language—stopping anything in the law that creates “a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden”—should be music to the ears of congressional Republicans. They have been struggling with Senate procedural rules regarding reconciliation, which likely precludes repealing ObamaCare’s cost-increasing insurance regulations while still allowing the repeal of the law’s mandates and subsidies.

Why does this matter? Insurance companies cannot presently afford to sell the policies people actually want. The law imposes a $100 a day penalty on insurers for every person to whom they sell a noncompliant policy. This effectively limits the individual market to nothing but ObamaCare-compliant plans, with premiums and deductibles driven sky-high by the law’s regulatory burdens. Yet ObamaCare subsidies can’t keep up with these increasing costs.

Enacting a partial repeal—that is, ending features like the individual mandate and the subsidies to insurance companies—risks accelerating the collapse of ObamaCare before an alternative is available. It also does nothing to provide those currently hurting under the law from any near-term relief.

Mr. Trump’s executive order allows Congress to move confidently forward with repeal, knowing that the prohibitive $100 penalty will be waived, and therefore vestigial regulations will not be an impediment to the immediate buying and selling of ObamaCare-exempt plans. The Trump administration effectively has signaled that it will use the Obama administration’s precedent of allowing noncompliant plans—remember “keep your plan” transition relief?—to create a parallel market where consumers can finally find plans they want and can afford.

Congress would be wise to add two components to the baseline repeal bill. First, the bill should include a statutory change codifying this suspension of penalties for selling ObamaCare-exempt plans. Minimizing the statutory penalties will calm the compliance departments at insurance companies. Otherwise, some insurers might be hesitant to enter a line of business on the basis of executive nonenforcement alone.

Congress should also fund state health-innovation block grants. This would give the Trump administration a powerful carrot in encouraging states to create more responsive insurance markets, including authorizing Obamacare-exempt plans under state law. The funds would also address the need to spread the burden of high-cost individual pre-existing condition coverage among all taxpayers, rather than forcing their costs to be borne only by those in the individual market, a feature which has helped drive sharply higher premiums.

The Trump administration has made very clear it will act—regardless of whether Congress does. Transition relief allowing the creation of ObamaCare-exempt individual markets is only one step toward solving the country’s many health-care problems. The broader debate over replacing ObamaCare and reforming the health-care system will continue for some time. But these early moves are crucial to providing ObamaCare’s hardest hit victims quick relief. States and insurance companies should move with the same urgency that the Trump administration has shown. It’s time to allow the choices that people want to be the choices they have.

Ms. Higgins is president of Independent Women’s Voice. Mr. Kerpen is president of American Commitment.