Promoting Healthcare Choice and Competition Across the United States

Background

Executive Order 13813, titled 'Promoting Healthcare Choice and Competition Across the United States,' sought to dismantle some of the regulations underpinning the Affordable Care Act (ACA) by expanding cheaper, less comprehensive insurance options. The directive primarily targeted three areas: Association Health Plans (AHPs), Short-Term Limited Duration Insurance (STLDI), and Health Reimbursement Arrangements (HRAs). By enabling small businesses to band together to form AHPs, the Trump administration aimed to grant them the leverage typically reserved for larger corporate entities, thereby sidestepping ACA mandates and potentially reducing costs. Executive agencies, including the Department of Labor, were directed to explore rule changes to facilitate AHP adoption rapidly.

The order also encouraged a regulatory shift for STLDI, intending to extend the allowed coverage period from three months to nearly a year, including possible renewals. This expansion effectively served as a mechanism for individuals to evade the ACA's essential health benefit requirements. By opting for STLDI, consumers could access plans that were not obligated to cover services such as prescription drugs or maternity care, thus lowering premiums at the cost of comprehensive coverage. Regulatory agencies like the Department of Health and Human Services actively developed guidelines to make such plans more widely available.

HRAs, another focus area, were promoted as a versatile tool for managing healthcare costs, offering employers a tax-advantaged means to fund employees' medical expenses, including premiums for individual health plans. By encouraging broader use of HRAs, the Executive Order aimed to extend affordable coverage options beyond traditional employer-sponsored insurance. This strategic pivot was complemented by directives compelling relevant federal agencies to identify and rectify any regulatory inconsistencies obstructing these objectives. The administration viewed these measures as a way to introduce competition into healthcare markets and reduce costs.

Reason for Revocation

The revocation executed by President Biden was part of a broader alignment with the Democratic Party's healthcare ideology, focusing on reinforcing, rather than circumventing, the ACA. The Biden administration criticized the 2017 policies for promoting plans that potentially left consumers underinsured and for threatening market stability by drawing healthy individuals away from comprehensive ACA markets, leading to higher premiums for those needing robust coverage. This direction marked a return to policies aimed at universal coverage and comprehensive care standards.

Additionally, the ideological shift championed by Biden underscored an emphasis on consumer protection and informed decision-making. The previous administration's encouragement of STLDI and AHPs raised concerns over inadequate consumer understanding of the limitations tied to these plans. Critics argued that these options, while reducing premiums, often lacked broad coverage, potentially leaving policyholders facing significant out-of-pocket expenses. The Biden administration sought to mitigate these risks by revoking regulatory measures facilitating them.

The commitment to reducing healthcare disparities was another driving force behind revocation. The previous framework was seen to disadvantage vulnerable populations, including individuals with chronic conditions and low-income families, who would more frequently encounter barriers in accessing necessary care under less comprehensive plans. By revoking the Order, Biden aimed to ensure these groups were not sidelined in a reformed healthcare landscape.

Moreover, revocation symbolized a repudiation of market-centric health reforms in favor of federal oversight and intervention to maintain standardized benefits and consumer protections. This recalibration aimed to rectify perceived inequities exacerbated by market-driven insurance options and sustain the ACA's foundational objectives.

Winners

The primary beneficiaries of the Order's revocation are consumers requiring comprehensive health coverage, particularly those with pre-existing health conditions. By limiting the expansion of plans like STLDI that offer bare-bones coverage, risk pools within ACA-compliant markets stabilize. This leads to more predictable premium costs for individuals dependent on extensive healthcare services, ensuring protection from significant financial distress.

Insurance companies operating under the ACA framework stand to benefit indirectly. The rollback reduces competition from low-cost insurance markets, such as AHPs and STLDI providers. These corporations can anticipate a more substantial enrollment from individuals seeking coverage meeting ACA standards. Insurers like Blue Cross Blue Shield, deeply embedded in state exchanges, may see enrollment gains and steadier premium revenue streams.

Furthermore, revocation aligns with the priorities of healthcare advocacy groups pushing for robust consumer protections and comprehensive coverage standards. These groups had long contended that the proliferation of limited-duration plans threatened to undermine hard-won gains in coverage quality and accessibility achieved through the ACA. The shift aligns policy with their goals, enhancing their influence on future healthcare reforms.

Losers

The insurance industry segments offering AHPs and STLDI faced potential setbacks due to revocation. Companies that had developed business models around these more affordable, limited-plans could experience diminished demand as regulatory environments revert towards stricter ACA compliance. Providers like Agile Health Insurance and others specializing in STLDI may find their market shrink.

Small businesses advocating for more cost-effective health insurance solutions could perceive the revocation as a hurdle. These businesses had hoped to capitalize on AHPs to gain negotiating leverage comparable to that of larger companies, potentially lowering operational costs associated with providing employee health benefits. The removal of support for these plans may increase small business insurance expenditures, thereby impacting competitiveness.

Additionally, a demographic subset of healthy, younger consumers who prefer low-premium, limited-benefit plans might find their insurance choices constricted. The broader return to ACA-focused policy could limit their ability to opt for minimally regulated, cost-effective options, forcing them instead into higher-premium plans that incorporate comprehensive coverage they may not perceive as necessary.