Some health care experts offer warnings about Trump’s new proposal

Oct. 05--Unable yet to fulfill a campaign promise to repeal the Affordable Care Act, President Trump has vowed to issue an executive order soon that would allow people to buy health insurance across state lines and buy together as a group to get cheaper rates. Those kinds of plans, experts said, would avoid state scrutiny for fiscal solvency and potentially flout consumer protections in a search of lower premiums, and they warned that similar plans have had spectacular failures that have left thousands without coverage owing millions in medical bills.

The Commonwealth Fund convened an expert panel discussion Wednesday on Trump's potential Executive Order, which could be issued as early as this week, authorizing interstate health insurance sales and potentially promoting what are known as association health plans. At least six states, including Georgia, already have laws that authorize the sale of health insurance across state lines but neither Georgia nor any other state has had a single policy sold under those laws, according to the National Academy for State Health Policy.

The reason companies don't pursue it is a "a chicken and an egg problem" -- companies need to set up a network of providers in a new market and they initially lack the market share to effectively negotiate good prices with those providers, said Sabrina Corlette, a research professor at the Georgetown University Center on Health Insurance Reforms.

"To appeal to new customers, you have to offer a good provider network at a reasonable price," she said. "To get providers to agree to contract with you, you have to demonstrate to them that you have the enrollment to make it worth their while. So hence the problem."

The ACA does allow for states to come together and form compacts to sell insurance across state lines but those compacts and the policies sold under them have to be approved by the U.S. Department of Health and Human Services, which may seem to be "burdensome extra steps for states and insurers" to pursue, according to a paper from the national academy.

Trump's idea might make that easier, and it was a provision included in some of the ACA replacement bills that did not pass, along with the idea of allowing great group purchases through the association health plans. Those plans would be exempt from many of the protections under the ACA, such as having to cover people with pre-existing conditions or charging sick people more for coverage, or providing certain coverage, such as maternity care, said Mila Kofman, executive director of the D.C. Health Benefit Exchange Authority.

"It essentially is the functional equivalent to repealing the Affordable Care Act," she said. "It is just doing it administratively as opposed to having Congress pass a law to repeal it."

One way to actually implement Trump's order would be to move regulatory authority of these plans away from the closer scrutiny of state regulators and put them under the federal Employee Retirement Income Security Act or ERISA that governs large employer self-insured plans, Kofman said. That would put them under the U.S. Department of Labor's supervision, which has far fewer resources and a much worse track record of stopping fraud and abuse, she said.

In one two-year period, for example, state regulators shut down 144 scams compared to three by the federal department, Kofman said.

Those association health plans, even when formed by legitimate groups for the purpose of offering cheaper health insurance to their members, are much riskier, said Kevin Lucia, a research professor for the Georgetown center. A plan in New Jersey that failed in 2002 left 15,000 members without coverage while owing $15 million in medical bills, he said. Another, the Indiana Construction Industry Trust, failed in 2001 and left 22,000 people without insurance to pay $22 million in medical bills, Kofman said.

States have guaranteed funds to protect consumers whose insurance companies go belly up but those funds would not protect people covered by these plans, she said.

Reach Tom Corwin at (706) 823-3213 or [email protected].

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