Change Is Here – President Trump's First Day Includes Addressing the Affordable Care Act and Freezing Regulations

On his first day in office, President Trump issued an Executive Order entitled "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal." The Executive Order is, in effect, a policy statement by the new administration that it intends to repeal the Patient Protection and Affordable Care Act (the "ACA" or the "Act") as promptly as possible. The Executive Order also directs the Secretary of Health and Human Services and the heads of all other executive departments and agencies that, pending repeal of the ACA, they are to exercise the full extent of their authority and discretion 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."

Impact on the Individual Mandate

The Executive Order does not explicitly name provisions of the ACA to be targeted by executive agency and department heads. However, Section 2 appears to be aimed at the ACA's "individual mandate," which requires that individuals obtain health care insurance or pay a fine, and one potential effect of the Executive Order may be limited enforcement of the individual mandate:

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.

Impact on the Insurance Marketplace

The Executive Order also mandates that executive agency and department heads "provide greater flexibility to States and cooperate with them in implementing healthcare programs," and "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."

Regulatory Freeze

Also on January 20, 2017, the White House issued a memorandum to the heads of executive departments and agencies entitled "Regulatory Freeze Pending Review." The memorandum directs that, except for certain emergency situations, no regulation be sent to the "Office of Federal Register (the "OFR") until a department or agency head appointed or designated by the President after noon on January 20, 2017, reviews and approves the regulation." "[W]ith respect to regulations that have been published in the OFR but have not yet taken effect," the memorandum directs agency and department heads to postpone the effective date for 60 days from the date of the memorandum, as permitted by law and subject to exceptions for emergency situations. The memo also instructs executive agency and department heads to consider delaying effective dates beyond the 60-day period to address substantial questions of law or policy.

So, What Does This Mean…..From the Counselor to the President 

On Sunday, January 22, 2017, Kellyanne Conway, Counselor to the President, said that President Trump "wants to get rid of that Obamacare penalty almost immediately, because that is something that is really strangling a lot of Americans…"[1]

When asked if Trump would stop enforcing the individual mandate, she replied, "He may." Conway also stated that the Trump Administration planned to end ACA's requirement that employers with more than 50 full-time workers offer affordable coverage to their workers. "We're doing away with this Obamacare penalty," she said. "This tax has been… a burden on many small business owners…"[2]

Conway also noted that the Trump Administration does not intend to eliminate ACA entirely: "For the 20 million who rely upon the Affordable Care Act in some form, they will not be without coverage during his transition time."[3] Conway noted that the President is "going to replace this with a plan that allows you to buy insurance across state lines, that is much more centered around the patient, and access to health care. . ."[4]

What's Next And What To Watch?

Earlier today, Republican Senators Susan Collins of Maine and Bill Cassidy of Louisiana unveiled a bill intended to be an "Obamacare replacement plan," "The Patient Freedom Act of 2017." The Senators' proposal, which is based upon a proposal originally put forward by the Senators in 2015, is intended to provide more power to the states on health care policy, to increase access to affordable insurance, and to help cover those who are currently uninsured.[5] For instance, states who like Obamacare will be able to keep it. Senator Cassidy explained as follows: "So, California and New York, you love Obamcare? You can keep it."

In sum, uncertainty remains as to the extent that ACA will be changed, replaced, or otherwise amended, whether the changes will be administrative or legislative, and how much the changes to the Act will disrupt the health care marketplace. A flurry of further activity by the President, agency administrators, and members of Congress is expected over the coming days and weeks. Health care entities should closely follow these developments to ensure that they have sufficient time to react and adapt to the changing health care environment.

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[1] 'This Week' Transcript 1-22-17: Kellyanne Conway, Sen. John McCain, and Sen. Chuck Schumer, http://abcnews.go.com/Politics/week-transcript-22-17-kellyanne-conway-sen-john/story?id=44954948 (last accessed Jan. 23, 2017).

[2] Trump's ACA executive order heightens insurance market jitters, Modern Healthcare, Jan. 22, 2017, http://www.modernhealthcare.com/article/20170122/NEWS/170129985/breaking-trumps-aca-executive-order-heightens-insurance-market (last accessed Jan. 23, 2017).

[3] Emily Schultheis, Top Trump Aide: 20M on Obamacare "Will Not Be Without Coverage" in Transition to New Plan, http://www.cbsnews.com/news/top-trump-aide-20m-on-obamacare-will-not-be-without-coverage-in-transition-to-new-plan/ (last accessed Jan. 23, 2017).

[4] 'This Week' Transcript 1-22-17: Kellyanne Conway, Sen. John McCain, and Sen. Chuck Schumer, http://abcnews.go.com/Politics/week-transcript-22-17-kellyanne-conway-sen-john/story?id=44954948 (last accessed Jan. 23, 2017).

[5] https://www.collins.senate.gov/newsroom/senators-collins-cassidy-introduce-aca-replacement-plan-expand-choices-lower-health-care (last accessed Jan. 23, 2017).