On January 20, 2017, President Donald Trump signed an Executive Order (EO) entitled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” to signal a clear message that “repeal and replace” of the Affordable Care Act (ACA) is a priority for the new administration. On the same day, the White House Chief of Staff, Reince Priebus, issued a memorandum to executive agencies ordering an immediate “regulatory freeze” and directing the Departments to send no regulation to the Federal Register “until a department or agency head appointed or designated by the President . . . reviews and approves the regulation,” and requesting agencies to temporarily postpone for 60 days from the date of the memorandum the effective date of regulations that have already been published in the Federal Register, but are not yet in effect.
While the Executive Order and memorandum to the Departments and Agencies do not create any new legal authority, it is a clear indication that the Administration intends to take immediate action to address the ACA. In particular, the EO specifically addresses mandates, taxes and other requirements under the ACA and affords states more flexibility in administering their own healthcare markets. The EO likely will prompt additional guidance and rulemaking from the executive agencies tasked with carrying out this Executive Order, including the Department of Health and Human Services (HHS), the Department of Labor, and the Internal Revenue Service. This memorandum analyzes the potential impact of the EO and regulatory freeze on key provisions of the ACA.The regulatory freeze is not uncommon and similar orders have been implemented by previous Administrations going back to at least the Carter Administration. Notably, however, these orders have delayed regulations for 60 days from their effective date, not from the date of the order. In this sense, the Trump Administration’s order is different than those issued by prior Presidential Administrations.
Key provisions of the Executive Order:
The Executive Order contains six sections, each with commitments and/or challenges the new Administration will seek to address in the coming weeks and months in the lead-up to a Congressional health reform package.
- Section 1 sets forth the Administration’s general commitment to repeal the ACA, and until that time, to ensure that the law is being efficiently implemented, take actions to reduce the economic and regulatory burdens of the Act, and to provide states with more flexibility. The Executive Order does not specify whether or not the Administration would support or oppose a legislative package that repealed the ACA with only a temporary transition package (pending adoption of a new replacement package sometime later.)
- Section 2 directs the Secretary of HHS, as well as other executive agencies, to exercise enforcement discretion to ease the “fiscal burden” and “regulatory burden” of the ACA through waivers, deferrals, exemptions, or delays. Policies such as the individual mandate, the branded prescription drug fee, the medical device tax, the Cadillac tax, issuer fees, and employer penalties are possible targets for enforcement discretion. In addition, the Administration could target the 3-to-1 age rating band for purposes of the law’s community rating requirement, as well as required mailings to insured individuals such as the Summary of Benefits and Coverage (SBC) and the Section 1557 “significant publication” notice and tagline requirements.
- Section 3 directs the executive agencies to afford States flexibility with regard to compliance with the ACA, to the maximum extent permitted by law. Likely targets under this section include expanding state flexibility with regard to 1115 waivers in the Medicaid program, section 1937 state plan flexibility, and expanding the scope of section 1332 waivers, which permit states to seek waivers of many of the statutory requirements of the ACA.
- Section 4 directs the executive agencies to encourage the “development of a free and open market in interstate commerce.” This section seems to be a clear indication that the new Administration will issue rules under section 1333 of the ACA to permit states to form interstate compacts that allow the sale of insurance across state lines, a key Administration promise.
- Section 5 indicates that the new Administration will (as it is required to under existing law) comply with the rulemaking procedures of the Administrative Procedure Act.
- Section 6 is a non-substantive section indicating the order is not otherwise intended to impair the authority already vested in the executive agencies nor to grant any rights to any individuals or entities seeking relief from any provision of the ACA.
Potential Administrative Actions under the Executive Order:
The chart below analyzes potential policy actions and describes whether these changes could be implemented through subregulatory guidance without further rulemaking. Note that many of these policy changes could be subject to legal challenge regarding the scope of agency authority to waive enforcement of ACA provisions.