This is the 3rd article in the series ObamaCare to TrumpCare. View the 2nd article here.
President Trump took action immediately following his inauguration to start implementing his campaign promise to repeal the Patient Protection and Affordable Care Act (PPACA or the Act) as soon as possible. As a practical matter, he can’t repeal it “line-by-line on day one” of his Presidency (a crowd-pleasing promise he made repeatedly while campaigning for President). So he did the next best thing: one of his first acts as President was to sign an Executive Order (also reprinted below) that instructs federal departments and agencies with authority under the Act to:
“exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
What Might This Mean?
It does not require agencies to take any specific action, such as repeal the individual or employer mandates, or not impose taxes or penalties on individuals without insurance or on large employers who do not offer affordable coverage or do not file 1094-Cs and 1095-Cs. However, it does encourage agencies to do whatever they can to “waive, defer, grant exemptions from, or delay the implementation of any provision” that would impose a cost, fee, tax, penalty or fiscal or regulatory burden on just about anyone. Possible actions include:
- IRS delay of the due date for paying the individual mandate tax or employer mandate penalty, or the date for filing information returns — perhaps to a date when Congress is likely to have passed a Budget Reconciliation Act that repeals much of the ACA?
- HHS expanding the definition of a “hardship” exemption from the individual mandate (and the tax).
- Agencies claiming lack of staff to audit employer or insurer compliance with ACA provisions, or not making it a priority to go after those who didn’t pay the transitional reinsurance fee or the PCORI fee. These and other taxes and fees could be repealed in a Budget Reconciliation bill, which could be enacted with only 51 votes in the Senate.
- HHS granting Section 1115 Medicaid waivers more liberally, which would give states more flexibility to design their own Medicaid programs and set eligibility criteria.
- or taxes.
Symbolic or Practical Effect?
Can the Executive Order really have any practical effect right away, or is it mostly symbolic? It is some of both, but I believe the practical effects will start sooner than many of the other experts are predicting.
It definitely is symbolic. It was one of the President’s first official acts, and it boldly states his intention “to seek the prompt repeal of” PPACA, and pending its repeal to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”
It’s immediate practical effect may be somewhat limited however, because, as it states, all actions must be “consistent with law” to minimize PPACA’s effects. Additionally, the particular actions to be taken will have to be approved by the new secretaries of HHS, IRS, and probably also the DOL and DOJ, and by some undersecretary positions, and the Senate must confirm the nominees for these positions and the new individuals need to start working.
Why I Believe Practical Effects will be Sooner than Later
My personal opinion is that the practical effects will start sooner than many others are predicting, for several reasons:
- I think the President and most of his supporters, as well as many of the Republicans in Congress, want the ACA repealed immediately (or at least not enforced), even if a replacement bill is not enacted simultaneously or even shortly thereafter.
- I think many of the Republicans in Congress (especially in the House) do not believe the dire predictions of an insurance market “death spiral” if the individual mandate is repealed but not the prohibition on pre-existing conditions limitations.
- Nor do they think most insurance companies will really pull out of the individual market. They hung in under the ACA, even when they were not getting the money they had expected under the risk adjustment mechanisms (the “3 Rs”). Will they really quit now? Besides, they are in the business of selling insurance. If they sit out for a while and just invest their assets in the stock market, they would have to fire a lot of employees. (OK, they might be tempted to terminate employees and instead invest in the stock market, which would hurt Trump’s promise to create more American jobs.)
- The Executive Order basically gives federal agencies the green light to delay due dates (perhaps to a date when Congress is likely to have passed a Budget Reconciliation Act that repeals much of the ACA?), or to claim they do not have enough staff to enforce ACA penalties or taxes.
- The Senate and House already passed budget resolutions (January 12 and 13), directing the appropriate committees to prepare “budget reconciliation” legislation (by January 27). This legislation could (and no doubt will) include provisions to repeal budget-related ACA provisions such as the individual and employer mandates and related taxes and penalties, subsidies for exchange coverage, and other taxes and penalties.
- President Obama and his Administration delayed many due dates of the ACA by executive order or administrative action, so why would President Trump and his Administration not be able to do so also? Examples from the past six years:
- 1- Delayed (indefinitely) the enforcement of the nondiscrim-ination provisions on insured group health plans. IRS Notice 2011-1, issued in late December 2010. The nondiscrimination rules have still not been enforced, nor regulations issued.
- 2- Delayed the initial effective date of the employer mandate from 2014 to 2015. IRS announced the delay July 2, 2013, in a Treasury blog at https://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx and in Notice 2013-45.
- 3- Delayed the effective date of the employer mandate for employers with 50-99 employees, from 2015 to 2016. For employers with 100 or more employees, lowered the “offer of coverage” threshold for 2015 from 95% to only 70% of full-time employees (thus excusing some employers from penalties that otherwise would have applied). Treasury Department Fact Sheet issued February 10, 2014.
- 4- Extended the 2015 Information Reporting deadlines a few months (Forms 1094 & 1095). IRS Notice 2016-4, December 28, 2015.
- 5- Delayed several features of the Small Business Health Options Program (SHOP): 1) Employee Choice Option in SHOP exchanges, and 2) October 1, 2013 online enrollment date. HHS Press Release, Sept. 2013.
- 6- Delayed auto enrollment requirements until the issuance of regulations, per government guidance issued February 9, 2012 (Q/A 1), which also said auto enrollment would not be effective until 2015 at the earliest. This was later repealed.
- 7- Delayed the W-2 group health plan reporting requirement for employers who issued fewer than 250 W-2s in the prior year. This delay is still in effect today.
- 8- Delayed the out of pocket maximum from 2014 to 2015 for plans that use multiple service providers and meet specified criteria. Announced in the ACA FAQs Part 12.
We will soon know whether the Executive Order is more symbolic or has practical effects. Employers should continue to comply with the provisions in current law, until official guidance provides otherwise.
Below is the full text of the January 20th, 2017 Executive Order signed by President Trump:
EXECUTIVE ORDER MINIMIZING THE ECONOMIC BURDEN OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT PENDING REPEAL
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1. It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law 111-148), as amended (the “Act”). In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.
Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.
Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.
Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.
Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other applicable statutes in considering or promulgating such regulatory revisions.
Sec. 6. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
DONALD J. TRUMP
THE WHITE HOUSE, January 20, 2017.