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Action Benefits
Feb 07, 2025
Executive orders make headlines. But, they don’t carry much legal weight. At their core, executive orders are simply memos directing agencies within the executive branch to do—or not do—something. Because Congress doesn't create these orders, the orders can't change the law. However, they do give significant insight into the administration's legislative and regulatory priorities.
Since January 20, a flurry of executive orders on health policy have been issued. What’s their immediate impact, and what can they tell us about potential policy goals? Here’s a crash course.
Many of the health insurance-related executive orders issued by the new administration simply revoke orders issued by the last administration. The revoked orders are in three chief domains: COVID-19 policies, prescription drug pricing, and the Affordable Care Act (ACA).
Throughout 2021, the previous administration issued several executive orders meant to bolster COVID-19 testing & research, provide economic relief, and enhance cooperation with other countries. Since the expiration of the Public Health Emergency, these orders have had minimal effect. Similarly, their revocation has no practical impact.
The previous administration issued an order entitled “Lowering Prescription Drug Costs for Americans,” which directed the Center for Medicaid and Medicare Innovation (CMMI) to create and test new drug payment and delivery models.
The Cell and Gene Therapy Access Model requires state Medicaid agencies to negotiate outcome-based agreements with manufacturers of these therapies. Therapies delivering results for enrollees earn a higher payment; those not showing results repay Medicaid in the form of rebates. The model went into effect on January 1, and will continue through December 21, 2030, without any further action.
The Medicare $2 Drug List Model encourages Part D plans to cap copays for certain generics at $2 per month. The Centers for Medicare and Medicaid Services (CMS) issued an RFI for participation in the program, with responses due December 9, 2024. What the government will do with these responses remains to be seen.
The Accelerating Clinical Evidence model was meant to reduce Medicare funding for drugs granted accelerated approval by the Food and Drug Administration. This reduction is intended to prevent manufacturers from delaying the completion of drug trials before full approval is granted. The model is still under development.
But here’s the rub – the new executive order only revoked the order establishing these models. CMMI, barring further action or direction, will decide whether these models continue. As such, the order has no practical impact.
On January 17, two days before the new administration's inauguration, CMS released the list of drugs selected for the second round of price negotiation under the Inflation Reduction Act of 2022 (see image).
The new administration signaled that negotiations will continue as the law prescribes, but it will seek input from stakeholders to improve the process.
The previous administration issued several ACA-related executive orders, which have now been revoked. Those previous orders:
The old orders resulted in several actions: Medicaid expanding to 12 months postpartum in some states, lengthening the open enrollment period, standardizing plan options, closing the “family glitch" in federal subsidies, and improving network adequacy standards for Marketplace plans.
Some of those orders, like the Medicaid expansion of postpartum coverage, have been codified into law. As we said before, a law doesn't change based on an executive order. Other actions, like closing the "family glitch," were taken through rule-making and may still be impacted by future rules or executive action.
How revoking these orders will play out depends heavily on existing regulations, and which policies the new administration will alter through rulemaking.
Section 1557 of the Affordable Care Act prevents providers receiving federal funding from refusing treatment or otherwise discriminating, on the basis of race, color, national origin, sex, age, or disability.
Previously, this language was interpreted to mean that providers could not discriminate against or refuse treatment to persons who identify as a gender other than the one they were assigned at birth. However, a new executive order defining sex as a person’s ”immutable biological classification as male or female " suggests that we’ll likely see revised rulemaking in this area.
Despite all the headlines and media attention given to the executive orders, they do not, as of this writing, have an industry impact – save for the expectation of Section 1557 rulemaking. However, legislation passed by Congress, rulemaking by federal agencies, and further directives can and will certainly impact the industry going forward. We’ll continue to watch and keep health insurance agents posted on what they –and their clients – can expect.
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