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What Trump’s Executive Order on the ACA Means

What Trump’s Executive Order on the ACA Means

It’s been a couple weeks now since President Trump was sworn into office and almost immediately signed an executive order minimizing the economic burden of the Affordable Care Act. Since then, legal scholars, health policy experts, insurance agents, and employers have all been trying to figure out what exactly it means.

For those who haven’t seen it, here’s the full text of the executive order:


Office of the Press Secretary

For Immediate Release January 20, 2017


– – – – – – –


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.



January 20, 2017.

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As you can imagine, there’s been much debate about the executive order and its ability to unravel the Affordable Care Act, and there’s not yet a consensus on what effect it could have.

The Individual Mandate

The first provision that comes to mind when one reads the executive order is the individual mandate. President Trump has publicly said that he’d like to see it eliminated, as have many Republican lawmakers. This is a logical place to start since top adviser Kellyanne Conway made the point on ABC’s This Week just two days after the order was signed. Bloomberg Politics quotes Conway as saying:

“What President Trump is doing is, he wants to get rid of that Obamacare penalty almost immediately, because that is something that is really strangling a lot of Americans, to have to pay a penalty for not buying government-run health insurance.”

There are a couple problems with single-handedly axing the ACA’s individual mandate. First, the Republican congress has made it very clear that it does not support an executive action selectively enforcing certain provisions of the law while choosing not to enforce other provisions. In fact, the House of Representatives sued President Obama when his administration made the decision to delay the employer mandate by one year. Second, and probably more importantly, the individual mandate is widely recognized as a necessary evil to make the guaranteed issue provision work. Without it, we’d likely see even more adverse selection in the individual market and could witness a mass exodus by insurance companies that continue to offer individual health insurance coverage.

A recent CNN Money article makes that very point, saying that insurers would “’seriously consider’ withdrawing from the market next year” if the mandate is repealed “without a replacement plan.” It also says that that, while Trump cannot unilaterally eliminate the individual shared responsibility requirement, Tom Price, his nominee for Health and Human Services Secretary, “could try to weaken the mandate by broadening the criteria for getting a hardship exemption.”

For now, you should tell your clients that the mandate remains in force and that the law does currently require them to purchase health insurance coverage or pay a penalty if they don’t qualify for an exemption and that they should definitely pay any shared responsibility penalty they owe for 2016. Whatever relief is eventually offered, it’s unlikely to be retroactive.

Relief for Employers

Of course, the individual mandate is not the only provision that could be impacted by the executive order; employers could also see some relief. That doesn’t mean the employer mandate will go away as a result of the order—that’s actually unlikely. But, as HR Morning points out, 1) we might see an extension of the “good faith” standard that says employers won’t be penalized for certain mistakes as long as they were trying to comply with the law; 2) the Cadillac tax may run out of gas; 3) the reinsurance program fee could go away; and 4) the PCORI fee may be suspended. All of those would be welcome by large employers.

State Waivers

One other possibility is that Secretary Price, if confirmed, could grant additional Section 1332 State Innovation Waivers, which allow states to experiment with the marketplace rules, and Section 1115 Demonstrations, which, according to, permit states to create “experimental, pilot, or demonstration projects that promote the objectives of the Medicaid and Children’s Health Insurance Program (CHIP) programs.” However, no executive order was required to accomplish this; the Secretary of HHS already has this power under the Affordable Care Act.

The Takeaway

While the executive order has certainly received a lot of attention, Health Affairs Blog concluded that, in reality, it is “much to do about very little.” That does not mean, however, that it is unimportant. The fact that President Trump signed this executive order only hours after taking office is a clear sign that he intends to keep his promise to repeal the Affordable Care Act and has certainly encouraged lawmakers to begin working on that process. Long story short, what the executive order means is not definitive, and it’s too early to say with any certainty what the replacement plan will look like. What we can say is that things will definitely be changing this year, so stay tuned—AHCP will continue to provide timely updates and do our best to keep you informed so you can feel confident in what you’re telling your clients.



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