Health

Here’s how Trump’s health care order affects California

President Donald Trump shows an executive order after he signed it Thursday as Sen. Rand Paul (R-KY), Vice President Mike Pence, Rep. Virginia Foxx (R-NC) and Secretary of Labor Alexander Acosta look on during an event in the Roosevelt Room of the White House.
President Donald Trump shows an executive order after he signed it Thursday as Sen. Rand Paul (R-KY), Vice President Mike Pence, Rep. Virginia Foxx (R-NC) and Secretary of Labor Alexander Acosta look on during an event in the Roosevelt Room of the White House.
Alex Wong/Getty Images

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The executive order on health insurance President Donald Trump signed Thursday seeks to do away with many coverage requirements under Obamacare. 

Trump's order directs the departments of Labor, Treasury, Health and Human Services and others to change some of the rules governing health insurance. Those rules are expected to be at odds with California law.

California's insurance commissioner called it an "attempt to sabotage" the Affordable Care Act and "undermine consumer protections."

"Trump's Executive Order calls on federal agencies to adopt rules that infringe upon states' rights, undermines state regulatory authority, and prevents the enforcement of state consumer protections," Commissioner Dave Jones wrote in a statement.

One concern is the administration's proposed rules that expand the reach of so-called Association Health Plans. The executive order proposes those plans come under a long-standing federal law called the Employee Retirement Income Security Act (ERISA). 

Executive director of Insure the Uninsured Project, Deborah Kelch, is concerned about that will mean for state efforts to regulate those plans since the 1990s.

"We changed the rules so that insurers couldn’t just cherry pick the healthy folks in the individual and small group markets. And they have to take everyone. They have to price them fairly. They have to provide reasonable, comprehensive benefits for everyone. The intention there is to spread the costs," Kelch said.

Experts say the change would rein in some of the Obamacare minimum standards for health coverage, meaning these plans could be cheaper, offer skimpier benefits and attract healthier people. That could drive up costs for older, sicker people who chose more traditional health coverage.

"This is an explicit and intentional effort to undermine the individual and small group markets leaving many of us with higher premiums and fewer choices," said Anthony Wright, executive director of the advocacy group Health Access California.

The executive order also seeks to extend the length and availability of short-term, limited-duration insurance. California limits those plans to about a half a year. The Golden State's laws may keep that from happening here.

"It should be a softer landing in California, just because of the fact that we already have very protective regulations around selling these types of insurance plans for consumers," said Dylan Roby, faculty associate at the UCLA Center for Health Policy Research.

The exact reach of the Trump administration directive won't be certain until the new rules are finalized, a process that could take months and would likely come after this year's open enrollment is over. 

Sally Pipes, president of the right-leaning Pacific Research Institute, doubts the ultimate effects on California's marketplace will be as great as many say. She applauds the potentially cheaper insurance options.

"Who this is going to be good for is a very small segment of the California population, and it’s going to help a lot of those people who are between jobs or they didn’t enroll when they should," Pipes said.

Ultimately, it's unclear how many Californians will opt for the cheaper, less comprehensive health plans, but state regulators say they'll continue to fight the Trump administration's efforts to poke holes in Obamacare. State Attorney General Xavier Becerra said he's prepared to fight the matter in court.