President Biden is reaching back into his old boss’s policy playbook to put new restrictions on short-term health plans. This month, the White House proposed a rule that will restore Obama-era limits on the plans.

The president has derided short-term insurance as “junk” that offers little protection from big potential healthcare expenses.

That’s a misleading, partisan claim. Short-term plans deliver a wide array of benefits at reasonable rates. Democrats don’t like them because they can be a superior alternative, with lower premiums and deductibles, to the coverage available on Obamacare’s exchanges—and could thus undermine their viability by luring customers away.

Thanks to a Trump-era policy change, short-term insurance plans can last up to 364 days and be renewed for up to three years—provided state lawmakers haven’t imposed more stringent regulations.

Some 3 million people enrolled in these plans in 2019, the year after the Trump rule took effect. Around that time, experts estimated that making short-term plans widely available could reduce the uninsured population by up to 3.7 million people.

Short-term plans are popular because they are affordable. And they are affordable precisely because they do not have to comply with Obamacare’s cost-inflating regulations—like its ten essential health benefits mandate, or its requirement that insurers charge the old no more than three times what they charge the young.

The average short-term plan is about 70% cheaper than the average, unsubsidized Obamacare plan. A healthy 28-year-old man living in a suburb of Washington can get a short-term plan with a $5,000 deductible for just $71 per month. The cheapest unsubsidized Obamacare plan he could get goes for around $140 per month—and carries a $9,100 deductible.

This is unfortunate but not surprising. Average individual marketplace premiums more than doubled from 2013 and 2019. Individuals and families may struggle to afford even a basic Obamacare plan, even if they qualify for premium subsidies, given the often hefty deductibles.

Short-term insurance plans can help people who fall through Obamacare’s many cracks find affordable coverage that can be every bit as comprehensive as what they’d find on the exchanges. Contrary to the Biden administration’s “junk” and “sabotage” arguments, short-term plans cover similar benefits and a greater share of healthcare costs than comparable Obamacare plans, according to research from the Manhattan Institute’s Chris Pope. Short-term plans may offer access to broader physician networks as well.

But if the administration gets its way, short-term plans won’t be available for much longer in their present form. The proposed rule would set a maximum term of three months for short-term plans and allow for a one-month renewal. It’s essentially the rule that was in place when Biden was Obama’s vice president.

This is a clear example of government overreach. Democrats are proposing to rob Americans of affordable coverage in order to prop up their perennially floundering healthcare law. The proposed rule is open for public comment through September 11. So the folks who will lose their coverage—and their allies—have several weeks to call on the administration to rescind the rule.

After all, the beneficiaries of the rule change won’t be individual patients but conventional insurers. A 2021 study found that short-term plans do not hurt the exchanges but rather encourage individual-market insurers to offer a wider variety of more affordable and appealing plans to stay competitive.

In states that allowed the sale of short-term plans from 2018 to 2021, individual-market premiums dropped substantially more than in states that restricted them. A paper published by the Galen Institute found that the only states where individual market premiums increased during that three-year period were the five that effectively prohibit short-term plans.

After announcing his plan to gut short-term insurance in a July 7 speech, President Biden credited his advisers—including advocates at the Departments of Health and Human Services, Labor, and Treasury—for educating him about the supposed dangers of “junk insurance.”

“I have to thank my staff . . . for focusing on the healthcare piece. I didn’t know some of this,” Biden said. “I thought I knew a hell a lot about healthcare.”

Clearly, the president still has a lot more to learn.


By admin