How Trump could use his executive power on Obamacare
NEW YORK (CNNMoney) — President-elect Donald Trump doesn’t plan to sit back and wait for Congress to repeal and replace Obamacare.
The soon-to-be dealmaker-in-chief intends to wield his executive authority to help shift the nation from the Affordable Care Act to a Republican vision for health care.
“We’re working on a strategy, in concert with the leadership of the House and the Senate, for both a legislative and executive action agenda to ensure that an orderly and smooth transition to a market-based health care reform system is achieved,” said Vice President-elect Pence last week, emphasizing the shift will be “stable.”
Pence’s comments, however, left legal and health care experts — as well as some Congressional staffers working on Obamacare’s repeal and replacement — scratching their heads as to what exactly Trump plans to do. A request to the Trump transition team for comment went unanswered.
It’s unclear from Pence’s comments whether Trump plans to take executive action or, more authoritatively, issue executive orders. The vice president-elect used both terms at a GOP press conference last Wednesday, noting that the White House staff is currently working on “a series of executive orders that will enable that orderly transition to take place even as the Congress appropriately debates alternatives.”
While Trump and Congressional Republicans have repeatedly vowed to swiftly end President Obama’s health care reform, their remarks have become more tempered since they won control of the White House in November. Not only are they concerned about the political fallout of immediately kicking 20 million people off their health insurance, they don’t have a detailed replacement plan in hand.
So it doesn’t seem likely that Trump will try to upend Obamacare as soon as he takes office on January 20. Regardless, a president doesn’t have the power to summarily overturn a law or nullify a regulation. For instance, he could not immediately dismantle the federal exchange, healthcare.gov, or stop paying premium subsidies — at least not without being sued, experts said. Only Congress writes laws, and altering a regulation requires an agency to publish the proposed changes, allow the public to comment and then write the final rule, a process which usually takes two years, said David Super, a law professor at Georgetown University Law Center.
But presidents can issue executive orders — which are signed and have the force of law — to direct federal agencies and officials on how to execute laws and policies. Obama issued only one executive order concerning the Affordable Care Act, said Tim Jost, a health law professor at Washington and Lee University School of Law. It directed several agencies to establish a mechanism to ensure that federal money flowing through Obamacare — such as the subsidies and community health centers funding — would not be used for abortions, consistent with federal statute.
Executive actions are more informal and broad. They could be defined as any action that is typically relating to policy matters that the president or his subordinates in the executive branch, Super said.
Here’s what Trump might do:
Stop defending lawsuits: Trump could take action on several court cases right away.
Here’s one example: He could end the administration’s defense of a case involving cost-sharing subsidies that insurers must provide for low-income enrollees. House Republicans sued the Obama administration, arguing they never appropriated the funds to reimburse insurers for lowering the deductibles and co-payments of these policyholders.
However, if Trump dropped the administration’s defense, it would end the reimbursements to insurers. That would wreak havoc in the individual market. Many insurers depend on these cost-sharing payments — without them, they might leave the market, which could lead to fewer choices and higher premiums for consumers. Such a move would be at odds with the “orderly transition” Pence stressed as important to the incoming president.
There are other legal battles with less dire consequences — including a group of nuns fighting Obamacare’s mandate that employers and health insurers on the exchanges provide free contraceptives — where Trump also could opt not to defend the law. (There is an exemption for certain religious employers.)
Revise guidance: The President-elect could direct federal agencies — such as the Department of Health & Human Services and the Internal Revenue Service — to revise the guidance they’ve issued to carry out Affordable Care Act regulations so they are more in line with Republican ideals.
Take the individual mandate, which requires most Americans to be insured or pay a penalty unless they can prove a financial hardship. Since Congressional Republicans want to do away with the mandate, Trump could try to loosen the criteria for qualifying for a hardship exemption. That way fewer people would have to pay the penalty, which would be in line with Republicans’ charge that Americans need relief from Obamacare’s exorbitant costs.
Change enforcement priorities: Another action Trump could take would be to signal that his administration will not impose penalties for certain infractions of Obamacare provisions.
One example: Employers who provide contributions to workers to buy their own individual health insurance can be slapped with a penalty of $100 per day, per person. Trump could suggest to his new IRS commissioner that enforcing the rule is counterproductive and a waste of resources, especially when Congress plans to replace Obamacare.
“You can’t rewrite the law, but there are a lot of gray areas where you can change the emphasis,” said Tom Miller, resident fellow at the American Enterprise Institute. “Where Obama stretched the law to be tighter and more all-encompassing, Trump will make it more flexible and less rigorous.”
Increase flexibility and issue more administrative fixes: Following Trump’s lead, the Health & Human Services Department could be more flexible in granting waivers. So states that want to institute additional rules — such as work requirements — in their Medicaid expansion programs would likely get the go-ahead, whereas they were denied permission under the Obama administration.
Obama has also used executive power to make changes to the law. One example: In November 2013, he announced “an administrative fix” to address the outcry over insurers canceling people’s pre-Obamacare plans just as the exchanges initial open enrollment began. He opened the door for enrollees to temporarily keep their pre-Obamacare plans by signaling to insurers that they could renew these policies if state insurance commissioners agreed. The move raised questions, but ultimately wasn’t successfully challenged.
“The executive branch can do a lot, until someone tries to stop them through the legal system,” said Larry Levitt, senior vice president at the Kaiser Family Foundation.
Tinkering with Obamacare, however, could be at odds with Pence’s stated interest in a smooth transition, experts said. Many of the law’s provisions are intertwined, so changing one might have a more widespread effect.
Relaxing the hardship exemption, for example, may lead to fewer healthy people enrolling, which could cause insurers to raise their premiums.
“There’s a delicate balance,” said Sabrina Corlette, research professor at Georgetown’s Center on Health Insurance Reforms. “Every action will have a consequence.”
Or, on the flip side, Trump could take actions that seek to stabilize the market so insurers don’t drop out before Republicans can put a replacement plan into effect. These might include bolstering Obamacare’s risk program that aims to protect insurers with a disproportionate share of high-cost, sick enrollees or making it harder for Americans to sign up for coverage outside the open enrollment period.
It’s also possible that the incoming administration might not yet have specific executive actions in mind, especially since GOP lawmakers remain very divided about what a replacement plan will look like.
Pence’s comments may have been more political in nature — serving to put Congress on notice that Trump wants a repeal and replace deal done soon, Miller said. The President-elect may also want to calm fears that he’s looking to dismantle Obamacare immediately regardless of whether it leaves millions of enrollees uninsured. Or he may want to let his base know that he’s in charge.
“He may want to force the issue or to diffuse an issue or just claim control…as long as he doesn’t get the blame,” Miller said.