Trump
© Getty Images/PoolPresident Donald Trump
Trump's order reveals how Obamacare functions as a trap for policymakers.

There is something clever, almost cunning, about Obamacare's policy scheme: It requires unequivocal political support from an administration in order to avoid accusations that the law is being undermined. It is a kind of joint political-policy trap, in which the only solution to the law's failings is to bail it out.

This is evident in the reaction to the executive order on health care President Trump signed today. Trump's order is light on specifics, but it is intended to facilitate the expansion of association health plans, which would let trade groups and small businesses band together to purchase health insurance like large employers. These plans would be exempt from some of Obamacare's rules.

This idea has been floating around Congress for decades. The House passed legislation aimed at expanding association health plans in March of this year, though it was never taken up in the Senate. Over the last several years, it has been championed by Sen. Rand Paul (R-Ky.), who spent months working with Trump on the plan. In addition, the order eases restrictions on short-term health plans, which are exempt from many of Obamacare's mandates.

Trump's order is intended to create less regulated, less expensive alternatives to Obamacare. It is not an attempt to unwind the law so much as to work around it, providing options that do not exist under the current scheme, which has resulted in steady and significant increases in health insurance premiums and limited health insurance choices in many parts of the country. The order is less a direct attack on Obamacare and more of an attempt to escape its failings.

Yet the reaction from defenders of Obamacare has been to accuse the president of undermining the health law. By creating a parallel insurance scheme, with less expensive plans that offer less robust coverage, they warn, it will lure healthy people away from Obamacare's insurance markets, and in the process will cause the insurance pool to become smaller and sicker, which inevitably means more expensive. It will exacerbate Obamacare's problems.

On the policy merits, this criticism is not wrong. Obamacare's government-created marketplaces were expensive and unstable before Trump took office, thanks in large part to the effect of its rules governing how insurers must cover preexisting conditions. But Trump's order won't ease that instability, and may well exacerbate it.

This would be true, however, of practically any effort to create more insurance options outside of its regulatory scheme. The law effectively requires total buy in, from market participants and from political overseers, in order to function. The result is situation in which the only way to avoid undermining the law is to prop it up. Obamacare is built to allow no alternative and no escape.

For various reasons, Trump's order may not work as well as intended. The order is short on details and will take time to work through the system and is unlikely to have a substantial immediate effect. It instructs the Department of Labor and Health and Human Services to consider finding ways to expand association health plans, and offers some broad suggests about how this might be accomplished but little in the way of specifics. As a result, the effort to spur the expansion of association health plans may produce limited results, with few new options coming online.

In addition, the executive order may create short-term confusion, since few if any new plans are likely to be available this year. The decision to expand these options by executive order leaves any newly created plans susceptible to undoing by a future administration that is more hostile to the idea. The idea is also virtually certain to spark legal challenge; exempting select plans from Obamacare's rules while leaving the overall regulatory infrastructure in place may not hold up in court.

There is also the possibility that Trump's plan will work too well, luring enough relatively healthy people out of Obamacare's insurance markets and producing a political backlash as premiums continue to rise and choices continue to decline. This is a plan that leaves many questions unanswered, and comes with substantial risks.

But in the meantime, it is also a plan that reveals the bind in which policymakers who wish to address frustrations with Obamacare now find themselves: It is an inherently flawed system that is made even more dysfunctional by attempts to work outside of it.

Peter Suderman is features editor at Reason.