President Donald Trump's executive order on health insurance, the most significant step so far to put his stamp on health policy, is designed to give more options to healthy consumers. It also could divide the insurance market in two.
The order, to be signed this week, will begin rolling back some requirements of the Affordable Care Act and could allow insurers to offer the kinds of lower-cost, less-comprehensive plans that were restricted by the 2010 health law.
A Trump administration official who previewed the order said it was aimed at promoting competition and choice in the health-care markets. One result, analysts said, could be that healthy people are drawn to the expanded, less-expensive plans, leaving sicker and higher-risk people in a dwindling pool that sees higher costs.
Together, if executed in an expansive way, Mr. Trump's changes could "cause a bifurcation of the market," said Cori Uccello, senior health fellow at the American Academy of Actuaries. Insurers that offer plans under the ACA could face new difficulties, but companies also might find opportunities in offering new types of insurance.
Mr. Trump's order, described by a senior administration official, will include broad instructions for federal agencies to loosen rules on health plans that the administration says have driven up premiums and reduced insurance offerings available to people who buy coverage on their own or who work for a small employer.
The order also will direct the Health and Human Services, Labor and Treasury Departments to lay the groundwork for the growth of association health plans, coverage that would have fewer mandated benefits than many current plans available to small employers and individuals.
The departments, in addition, will be told to take steps to expand the availability of short-term medical plans that had been curbed by the Obama administration.
The order will begin the reversal of the Obama administration's stance that health insurance sold to people who don't get coverage through a large employer had to be more tightly regulated by the federal government, with mandated packages of benefits and requirements that health plans be offered to and priced equally for everyone regardless of medical history.
"It could amount to effective deregulation of the individual and small-business insurance markets," said Larry Levitt, a senior vice president at Kaiser Family Foundation.
Some key details remained undefined by Sunday, ahead of the signing of any final version of the order, and questions remained in particular around the rules on association health plans. But the combined result of the approach, some analysts said, could be to usher in broad changes to the business of selling health coverage to small employers and maybe individuals.
President Barack Obama and fellow Democrats saw the ACA as a way to guarantee that people with prior health conditions could buy coverage and that health plans would cover a broad set of benefits, including maternity care and hospitalization, thus protecting consumers from unwittingly buying shoddy products. But Republicans have said the insurance rules have driven up premiums for healthier Americans especially.
The most consequential aspect of Mr. Trump's order likely will be the moves toward expanding the use of association health plans, which would be treated more like the policies now offered by large employers with workers in different states. These policies would be available to small employers that want to band together to offer coverage that wouldn't be subject to the full range of ACA requirements, such as the mandated package of benefits.
Health analysts have said that such plans likely would be attractive to employers and workers with limited health needs, leaving workers with costlier conditions to seek insurance in a pool with other, sicker people. Such a pool would have few healthy customers to offset costs; prices would likely rise.
The president also is set to order federal agencies to start winding back an Obama-era rule curbing coverage known as "short-term medical insurance," a low-cost but limited-protection option, and to allow people to once again buy plans in that category that could last for almost a year.
Such plans, which can now only be carried for 90 days, often are sold only to people who qualify as healthy and don't cover costs related to enrollees' pre-existing conditions. They also can cap payouts and often don't include benefits required of ACA plans, such as prescription-drug coverage.
If restored, analysts said, the more extensive short-term plans would again become more appealing to healthier customers seeking cheap alternatives to ACA plans, while higher-risk people would remain in traditional insurance coverage.
Young people could "flock" to the expanded short-term plans, said Jerry Dworak, chief executive of Montana Health Co-op, a nonprofit offering marketplace plans in Montana and Idaho. "It's going to skim some of the low-risk people off the exchange."
Some industry officials said consumers would benefit from expanding short-term medical insurance. "The current Obama-era rule required that they buy a new plan, with new deductibles every 90 days. This hurt consumers, and did nothing to stabilize the Affordable Care Act," said Jeff Smedsrud, co-founder of the online insurance brokerage HealthCare.com.
The International Franchise Association, a trade group whose members say they have been hit hard by several parts of the ACA, praised the proposed expansion of association heath plans.
Some small business advocates disagreed.
"I agree that we need to find more options for small business, but AHPs are not the answer. They allow cherry picking that could undermine the traditional small group market," said Rhett Buttle, director of private sector engagement at the Department of Health and Human Services during the Obama administration. "Additionally, they could lead to premium instability for small businesses and put some of their consumer protections at risk."
A splitting of the market, should that occur, could carry mixed results for the insurance industry overall, said Deep Banerjee, an analyst with S&P Global Ratings. It could present difficulties for insurers that offer plans under the ACA, which might lose enrollment among healthy people at a time when they have locked in their rates and exchange-participation footprint for 2018, he said.
Currently, the biggest players offering ACA coverage for next year are mostly Blue Cross Blue Shield insurers and Medicaid-focused companies such as Centene Corp. and Molina Healthcare Inc.
At the extreme, "the ACA individual market could effectively become a high-risk pool in the future," he said, and insurers might be reluctant to participate in certain markets in 2019 and later.
But, he said, the Trump administration's moves, while likely hurting the existing ACA markets, might create new business for companies that offer short-term insurance and aren't committed to a significant ACA exchange presence for next year, such as UnitedHealth Group Inc.
"Risk brings opportunity," he said. "Those with significant exposure to association and short-term plans will benefit."