Donald Trump

Vullo: “Real trouble” with Trump’s “destabilizing” health care order

President Donald Trump’s executive order on health care signed on Thursday is an “effort to preempt state law” that will have a “destabilizing” effect on the health insurance market, New York’s top insurance official said. 

State Department of Financial Services Superintendent Maria Vullo spoke at City & State’s State of NY Health event on Thursday morning, shortly before the executive order was made public. But news reports had summarized what was expected to be included.

Trump issued the unilateral order as a way to give Americans more lower-cost options for health insurance by creating new rules for some insurance products that were not allowed under the Affordable Care Act, widely known as Obamacare. This could pave the way for so-called “association health plans” to be sold across state lines, although critics have claimed that the move is intended to undermine Obamacare, which Trump has failed to repeal and replace as promised.

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New York already allows association health plans, Vullo said, but they have to comply with New York law and state-level standards.

“If, however, it is saying that you can sell association health plans across state lines and you don’t have to comply with the state in which you’re selling it, then I would have real trouble,” Vullo said. “Because that’s a race to the bottom.”

Vullo feared that insurance providers could go to another state “that won’t provide essential health benefits, won’t provide full coverage, and then sort of sell them into New York.”

Vullo said it was an “an effort to preempt state law.”

“That is destabilizing – no question about it – to the health insurance market. Because it’s an unlevel playing field and if these association health plans are permitted to not follow the law, they will cherry pick risk,” leading to higher premiums for sicker patients, she said.

Selling association health plans across state lines may appear to be a good option because it gives people more choices, Vullo said. But “that’s a marketing ploy. It’s not good. It’s not good for business, it’s not good for consumers, and we need to fight it back. Because it just sounds like it’s helping competition when it’s actually not helping competition.”

Vullo questioned whether the executive order would even be legal, because it appeared to her to preempt state law. State Senate Health Committee Chairman Kemp Hannon, a Long Island Republican who spoke on a later panel at City & State’s health conference, echoed Vullo's concerns, calling it “an executive order that contravenes state law.

State Attorney General Eric Schneiderman also spoke out against the executive order. He released a statement Thursday that said Trump was “treating New Yorkers as political pawns in his effort to sabotage the health care market.”

“Let me be clear: if the Trump Administration takes any action that violates the law – or tramples on New Yorkers’ constitutional rights – we will take them to court,” he said.

Despite the executive order and other cuts to federal health care funding, Vullo expressed optimism in her speech. 

“So what is the state of New York health?” she asked. “It’s under attack, but it’s strong.”

RELATED: More training needed to fill New York's 'middle skill jobs'

You can watch an excerpt from Maria Vullo's keynote speech below.

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