On October 12, 2017, President Donald Trump signed an executive order that ended cost-sharing subsidies to health insurance exchanges that are part of the Affordable Care Act. With 2018’s enrollment period opening on November 1, questions abound from insurers, health care providers, and individuals about the immediate implications of the order -- and what it might mean for the future of healthcare in the US.

So… What Happened?

President Trump’s executive order cut off government funding for cost-sharing reduction (CSR) payments to insurers until Congress specifically appropriates money to cover those payments. The Trump administration argues that this is a constitutional issue rather than a move on healthcare policy, as the federal government cannot spend money that Congress has not authorized it to spend.

A 2014 House of Representatives lawsuit challenged the Obama administration’s claim that the federal government had the authority to initiative these payments, so Trump’s executive order addresses that issue directly.

What Does it Mean?

Critics of Trump’s executive order say that CSR payments are a critical aspect of what keeps health insurance through ACA exchanges affordable for low-income individuals and families. Cost-sharing reduction benefits are available to those who earn up to 250% of the federal poverty level.

Those individuals benefit from cost reduction, while insurers benefit, too -- without those subsidies, insurers would have to cover many of those individuals at a loss.

America’s Health Insurance Plans (AHIP) and Blue Cross Blue Shield Association released a joint statement that included:

“These payments are not a bailout – they are passed from the federal government through health plans to medical providers to help lower costs… We need constructive solutions that increase consumer choice, lower consumer costs and stabilize local markets. Terminating this critical program will do just the opposite. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted.”

But Avik Roy writes in Forbes that individuals who benefit from CSR will not see their premiums rise:

“The other misconception… is that lower-income folks will see higher premiums or out-of-pocket costs due to the Trump decision... Anyone who benefited from cost-sharing subsidies will see no change to their net premiums or cost-sharing.” Instead, writes Roy, insurers will likely raise the premiums of those who do not benefit from CSR to cover the shortfall from a lack of federal subsidies.

What Now?

Trump’s executive order was met almost immediately by a lawsuit from 18 states and the District of Columbia that asked the court to issue an injunction that prevents the administration from cutting off the ~$7 billion in payments. Insurers themselves are poised to sue as well.

After months of failing to repeal or replace Obamacare, the Trump administration has begun to take smaller actions that address specific points (or weaknesses, as his supporters say) in the law. Last week’s actions also included opening small businesses to pool together to purchase ‘association plans,’ which is effectively similar to how professional employer organizations (PEOs) operate.

Short-term, limited duration plans will be available as well to cover those between jobs or who need insurance for less than a year, while employer-funded health reimbursement accounts have a new lease on life.

With insurers and pundits projecting different futures for Obamacare -- and, of course, with Republicans and Democrats painting very different pictures of healthcare in 2018 and beyond -- it is too early to proclaim with any degree of certainty the implications of the Trump administration’s recent actions. The dismantling appears to have begun, though, so both employers and individuals alike should keep a close eye on developments with the ACA… because the one thing we do know is that there will be more.