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Politics

Trump's Obamacare order could destroy the health-care system

Catherine Rampell on

WASHINGTON -- President Trump has made a lot of promises on health care.

Somehow, though, I don't remember him promising stadiums of cheering fans that he'd take away protections for pre-existing conditions, increase deductibles, spike premiums, eliminate basic coverage requirements and, more generally, destabilize the individual health-insurance market.

But that is what he said he'd do Thursday, when he signed an executive order on health care.

Those aren't the precise words he used, of course. But they are the consequences of the policy bombs he wants to set off in two relatively obscure corners of the insurance market: association health plans and short-term health plans.

What are these plans, you might ask?

Under current law, an association of small businesses (such as a group of law firms) can band together and market insurance to members. These association health plans must abide by all the consumer protections of the Affordable Care Act. They are also subject to the insurance laws and rules of the state in which they're sold.

But under Trump's executive order, depending on what the final regulations say, an association could exempt itself from lots of federal Obamacare requirements (such as essential health benefits) and choose any state to be its regulator (regardless of where its members are).

Meaning if it wanted to be regulated by a state that doesn't require coverage of prescription drugs or cancer treatments, it could.

This would not only rob states of their sovereignty, which Republicans have so often claimed to champion, but also create a race to the bottom. Pursuing ever-lower premiums, every association would likely incorporate in the most Wild-West-like state around, in the way that credit card companies tend to domicile in South Dakota.

The administration has also left open the possibility that individuals -- and not just small employers -- could buy into these association plans, further siphoning people out of the individual markets.

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