Update #3: First Executive Action on ACA Could Defeat Mandates
On Inauguration Day, President Trump signed an Executive Order to begin dismantling the Affordable Care Act (ACA) or “Obamacare.” While the Order has little immediate effect, and may have been issued on “day one” mainly to fulfill campaign pledges, it opens the door to other regulatory actions that could dismantle parts of the ACA’s structure even without Congressional action to repeal the law.
The Order directs all federal agencies to ease the “burdens” of the ACA while awaiting repeal and possible replacement. Most importantly, it directs each federal agency “to the maximum extent permitted by law . . . [to] exercise all authority and discretion available to them to waive, defer, grant exceptions from, or delay” any provision that imposes a fiscal burden, penalty, or tax. This very broad directive opens the door to many potential actions that could shatter the structure of the ACA.
For example, the Department of Health and Human Services can grant “hardship” exemptions from the individual mandate. President Obama used it in 2014 so that individuals whose policies were cancelled by their insurers because they did not comply with the ACA would not be penalized while they sought a replacement policy. Will HHS now grant wholesale exemptions from the individual mandate on the grounds that all the insurance available in the Exchange markets is “too expensive”? That would in effect erase the individual mandate and discourage the “young and healthy” from remaining in the market. Likewise, the IRS previously deferred the employer mandate penalty for employers in the 50 to 100 employee range. It could conceivably come up with a broader exemption to let some employers dismantle their coverage.
We will continue to issue updates as specific regulatory actions are taken under this Order.