Here's what Trump's executive order really means for Obamacare

In one of his first official actions, President Trump signed an executive order late Friday that directed federal agencies to use their authority to relieve individual Americans, businesses, state governments and others from “burdens” placed on them by the Affordable Care Act.

The Trump administration and its Republican allies in Congress billed the order as a first step in their push to repeal Obamacare.

So, does this mean the new president has scrapped the 2010 healthcare law “on Day One,” as he once promised he would do? Or is this just more talk from the new president?

As with everything about Obamacare, it’s complicated.

Here’s what Trump’s order did, and what it didn’t do.

Has Obamacare been repealed?

In a word, no.

The healthcare law was a huge piece of legislation that included scores of legal requirements and provided hundreds of billions of dollars in assistance to help extend health coverage to millions of Americans.

All that can only be repealed by another law, which would require an act of Congress, not just an executive order from the president.

That is why congressional Republicans are debating how to craft a new law that could supplant all or part of the one President Obama signed in 2010.

Which ‘burdens’ is Trump talking about?

The biggest one is probably the requirement that Americans either have health insurance or pay a tax penalty.

This stipulation, the so-called insurance mandate, has always been the most unpopular part of Obamacare. But it is written in law, so the Trump administration cannot simply scrap it.

The law gives the administration discretion about how to enforce the penalty and how many exemptions can be granted for people who claim hardships, such as an inability to find an affordable health insurance plan.

The Obama administration was relatively forgiving about enforcing the penalty, already. But the new administration could conceivably loosen the rules even further so fewer Americans have to pay.

The Trump administration could also give states much more flexibility to reshape their Medicaid programs, which cover about 70 million low-income Americans. Such flexibility already exists in Obamacare.

Many Republican governors have sought permission, for example, to require poor adults on Medicaid to seek work. 

Would loosening requirements effectively destroy Obamacare, even if it is not repealed?

It could, but probably not right away.

The insurance requirement is considered critical to maintaining health insurance markets because it encourages healthier people to sign up for coverage. And healthier people offset the cost of sicker people. And that, in turn, keeps premiums in check.

If the requirement is loosened, as the Trump administration appears to be contemplating, that system could begin to collapse. That would send premiums skyrocketing even more than they did last year for some people who bought insurance on Obamacare marketplaces. 

The enrollment period for 2017 coverage is almost over, so that may not happen right away.

But unless Republicans come up with an alternative way to get younger, healthier people to buy health insurance, any move by the Trump administration to weaken the insurance requirement could destabilize insurance markets and prompt insurers to seek much higher rates for next year or stop selling coverage.

Republicans are very worried about being blamed for such a collapse, which could cause millions of Americans to lose health insurance.

What does this order mean for an Obamacare replacement?

That’s not clear.

Republican lawmakers have been struggling with how to fulfill their pledge to repeal the healthcare law, replace it with something else and preserve coverage for the more than 20 million people who rely on it.

To do this, they will have to design a path to transition from the current Obamacare system to whatever they come up with.

Key to this is preventing the current system from collapsing.

If Trump isn’t careful, he could hasten such a collapse, by, for example, scaling back the insurance requirement too much.

noam.levey@latimes.com

@noamlevey

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