A Short-Term ObamaCare Fix
An HHS rule change could revive part of the individual market.
By The Editorial Board
The Wall Street Journal0
August 15, 2017
Republicans in Congress haven’t repealed or replaced Obama Care, but the Trump Administration still has an obligation to help Americans facing higher premiums and fewer choices. One incremental improvement would be rescinding regulations on temporary health-insurance plans.
Sen. Ron Johnson (R., Wis.) this summer sent a letter to the Health and Human Services Department about an Obama rule on short-term, limited-duration health insurance plans, which as the name suggests offer coverage for certain periods, often insuring against hospitalizations or other unexpected events. A person could hold such a plan for 364 days, but a rule issued last year limited the duration of the policy to a mere 90 days, effective April 1.
The reason for the restriction is straightforward: coercion. These plans are useful options for someone who loses a job or is otherwise without coverage, and until recently an estimated 650,000 to 850,000 people were in the market at any given time, with an average policy duration of five or six months, as the Johnson letter notes. Yet the Obama Administration nixed this choice to push individuals into ObamaCare’s exchanges.
Mr. Johnson’s letter points out that HHS explicitly said in the Federal Register that stopgap plans might target the young and healthy, “thus adversely impacting the risk pool for Affordable Care Act-compliant coverage.” Recall that the law’s central conceit is that healthy individuals must be forced to subsidize the aging and sick, or the exchanges will tank.
The short-term plans don’t count as minimum coverage under the law’s individual mandate, which means policyholders are subject to the tax penalty. Yet the irony is that before the new rule, many individuals still chose to pay the penalty in exchange for the flexibility of benefits the short-term plans offered.
Health and Human Services could restore the duration length to a year and allow the plans to satisfy the coverage mandate. The point is to recreate some portion of the individual market that the Affordable Care Act destroyed. Short-term plans have traditionally been a small share of the insurance market, but perhaps more consumers will sign up as insurers continue to flee the ObamaCare exchanges and premiums continue to increase.
One question is political. Congress failed to replace ObamaCare, and Republicans fear they will now own all problems with the exchanges. The Trump Administration may thus be reluctant to revoke regulations that exist to sustain the ObamaCare status quo.
Yet no one expects this discrete change to topple ObamaCare, and the law’s dysfunctions will compound in any event. The damage from the GOP’s reform failure will continue to radiate in ways that are hard to predict, but the Administration’s best move now is to offer consumers as many health-care choices as possible.
Republicans in Congress haven’t repealed or replaced Obama Care, but the Trump Administration still has an obligation to help Americans facing higher premiums and fewer choices. One incremental improvement would be rescinding regulations on temporary health-insurance plans.
Sen. Ron Johnson (R., Wis.) this summer sent a letter to the Health and Human Services Department about an Obama rule on short-term, limited-duration health insurance plans, which as the name suggests offer coverage for certain periods, often insuring against hospitalizations or other unexpected events. A person could hold such a plan for 364 days, but a rule issued last year limited the duration of the policy to a mere 90 days, effective April 1.
The reason for the restriction is straightforward: coercion. These plans are useful options for someone who loses a job or is otherwise without coverage, and until recently an estimated 650,000 to 850,000 people were in the market at any given time, with an average policy duration of five or six months, as the Johnson letter notes. Yet the Obama Administration nixed this choice to push individuals into ObamaCare’s exchanges.
Mr. Johnson’s letter points out that HHS explicitly said in the Federal Register that stopgap plans might target the young and healthy, “thus adversely impacting the risk pool for Affordable Care Act-compliant coverage.” Recall that the law’s central conceit is that healthy individuals must be forced to subsidize the aging and sick, or the exchanges will tank.
The short-term plans don’t count as minimum coverage under the law’s individual mandate, which means policyholders are subject to the tax penalty. Yet the irony is that before the new rule, many individuals still chose to pay the penalty in exchange for the flexibility of benefits the short-term plans offered.
Health and Human Services could restore the duration length to a year and allow the plans to satisfy the coverage mandate. The point is to recreate some portion of the individual market that the Affordable Care Act destroyed. Short-term plans have traditionally been a small share of the insurance market, but perhaps more consumers will sign up as insurers continue to flee the ObamaCare exchanges and premiums continue to increase.
One question is political. Congress failed to replace ObamaCare, and Republicans fear they will now own all problems with the exchanges. The Trump Administration may thus be reluctant to revoke regulations that exist to sustain the ObamaCare status quo.
Yet no one expects this discrete change to topple ObamaCare, and the law’s dysfunctions will compound in any event. The damage from the GOP’s reform failure will continue to radiate in ways that are hard to predict, but the Administration’s best move now is to offer consumers as many health-care choices as possible.
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