President Trump Initiates Reform to Decrease Federal Regulation

Insurance Law Alert

February 28, 2017

Cynthia J. Borrelli

Cynthia J. Borrelli


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The Trump administration recently has made notable efforts to decrease federal regulation. First, on February 23, federal regulators extended the time for consumers to renew health insurance that is not fully compliant with the federal Patient Protection and Affordable Care Act (ACA), permitting the so-called “grandmothered[1] coverage” through 2018. Of course, given that insurance is primarily regulated at the state level, the decision to allow the sale of grandmothered policies that do not fully satisfy ACA standards is left to the states. While a majority of states will allow sales of such plans, certain states, including New Jersey, will only permit plans for an abbreviated period. In New Jersey, such plans can remain in force through December 2017. On the other hand, in New York, as of the current date, renewals of non-ACA compliant plans are not being permitted. The Center for Medicare and Medicaid Services (CMS) justifies its decision in an effort to orderly transition all non-grandfathered coverage in the individual and small employer markets to full compliance.

In a broader effort to effect regulatory reform in favor of U.S. business, by executive order, President Trump ordered the federal agencies to create regulatory task forces to identify burdensome or duplicative regulation viewed as harmful to the U.S. economy. See link, www.whitehouse.gov/the-press-office/2017/02/24/presidential-executive-order-enforcing-regulatory-reform-agenda. Thus, the President has prompted deregulation by executive order. The executive order requires agencies to establish a team of dedicated officials to “research all regulations that are unnecessary, burdensome and harmful to the economy and therefore harmful to the creation of jobs and business.”[2] Each agency must make recommendations to repeal or substantially amend those regulations.

Most executive orders are enforceable only through political pressure as they do not implement any legal authority granted to the President by statute or regulation. They merely express a president’s preferences and direct agency heads to implement them. At first blush, President Trump’s executive orders may enable him to make good on campaign promises; however, existing rules remain in effect until revoked or amended by regulation which requires the agency to provide proposed regulatory language and to follow the notice and comment rule making process outlined under federal law. Thus, no actual deregulation has taken place.

Over the next 100 days, it will interesting to see whether the President’s deregulation by executive order does evolve into actual regulatory adoptions, which deregulate and promote U.S. business.

 


[1] Grandmothered plans, as opposed to grandfathered plans, can, with federal authority, exist through 2018. Grandfathered plans, on the other hand, are plans which were sold prior to the ACA’s enactment in 2010 and can be extended indefinitely, assuming their original provisions are not substantially altered.

[2] Law360 February 24, 2017.