Executives and regulators say Trump executive order could bring lawsuits, weaken insurance markets


Reports that President Trump may issue an executive order this week rolling back insurance regulations have set commercial insurance markets on an anxious footing.

It continues to be a hypothetical order until it’s actually issued, but reports offer a range of potential areas for action.  For example:

  • It’s possible the order might force states to allow health plans domiciled, regulated and approved in one state to sell into another state. (CNN Money)
  • It’s possible the order will spur the re-growth of association health plans and “short-term medical insurance.” (WSJ)

These sorts of policy options could have significant impacts on state markets, depending on how things play out.  We surveyed insurance officials in five markets about their thoughts on the pending executive order.  Here’s what we found.

California’s Insurance Commissioner David Jones said he intended to sue the Trump administration if early reports hold true.

Depending on how he does it, I plan to sue him… Insurance commissioners on both sides of the aisle think it’s a really bad idea to undermine state based consumer protections when insurers already are able to sell across state lines.

In Hawaii, Michael Stollar is the President and COO of HMSA, the state’s dominant insurance carrier.  Hawaii is the beneficiary of a smart, broadly accepted health system model authorized under the “Pre-Paid Health Care Act” passed in 1974.  The model has resulted in among the highest levels of coverage and among the lowest costs of any state in the country both before and after the ACA.

Stollar raised concerns about the impacts in Hawaii of selling across state lines during an interview with us in January.  From that January interview:

We think that there is a threat to pre-paid health care law here, and we don’t think a lot of people see that yet…

I think it’s possible that there will be a rush to states with loose or minimal standards, where plans could then sell into Hawaii from those states, and we’ll see a race to the bottom.

Last week, when I reached out to Stollar about news of this new executive order, he put the lack of predictability coming from Washington DC in the context of the success Hawaii has had with their unique model.  From comments last week.

The Prepaid Health Care Act is part of a tradition of caring and has ensured broad and deep health care coverage in Hawaii and a strong health care system. Bloomberg news recently ranked the state’s health care system as the most efficient in the country.

A law that undercuts Prepaid could erode the health of Hawaii.

Lori Wing-Heier is the Director of Alaska’s Division of Insurance.  During an event in Anchorage last week, I asked her whether the instability coming from the Trump administration and Washington DC was harmful to Alaska’s health care system.

Yes… Even if it’s with the intention of improving the ACA… it just creates uncertainty with insurers. We’re concerned that with all of the discussion with the Affordable Care Act and where it’s going that we will actually see a decrease in enrollment.

In Washington State, Insurance Commissioner Mike Kreidler told Politico:

My insurers here absolutely cringe when you talk about across-state sales… I just can’t imagine it having that kind of impact. State law is going to supersede an executive order.

Texas’s newly appointed Commissioner of Insurance, Kent Sullivan, did not respond to a request for comment.  Texas has the highest rate of uninsured in the US at about 19%.  The Texas Division of Insurance does not accept the authority of the ACA.  So, it does not regulate and approve health plans based on any statutory or regulatory language stemming from the federal law. It only approves plans based on Texas law and federal statute passed prior to the ACA.  CMS fills the void with an informal “guidance” process for health plans which sell in Texas.

The executive order is reportedly set to be signed on Thursday.