When Regulators Hurt People: The Biden Administration Aims To Destroy ObamaCare’s Competition

This article appeared in Real Clear Health on March 26, 2024

Right now, most consumers who miss ObamaCare’s enrollment periods can buy “short‐ term limited duration insurance” that covers them until the next enrollment period. At that point, they can either enroll in Obamacare or renew their short‐​term plan.

Last year, the Biden administration announced its intention to require insurers to terminate all short‐​term plans after just four months and to prohibit renewals. When the Obama administration imposed a similar rule, the National Association of Insurance Commissioners warned, “state regulators believe the arbitrary limit…could harm some consumers.” Why?

The Biden administration aims to destroy ObamaCare’s competition, even if it means some consumers will suffer—in the administration’s words—“potentially worse health outcomes.”

Enrollees who fall ill would lose their coverage within four months, at which point they generally would not be eligible to enroll in ObamaCare. Since the administration would forbid them to renew their short‐​term plans, they would then go up to 12 months without health insurance.

For instance, Consumer Reports explains how in 2017 the Obama rule terminated 61‐​year‐​old Phoenix resident Jeanne Balvin’s coverage in the middle of her diverticulitis treatment, leaving her with $97,000 in medical bills.

The Biden administration admits its proposal would indeed expose consumers to “higher out‐​of‐​pocket expenses and medical debt, reduced access to health care, and potentially worse health outcomes.”

They gingerly acknowledge their proposal “could also lead to an increase in the number of individuals without some form of health insurance coverage.” Estimates from the non‐​partisan Congressional Budget Office suggest 500,000 people would lose comprehensive coverage. The administration even proposes to require short‐​term plans to carry a label warning consumers about the effects of the administration’s changes.

Why are regulators introducing changes so dangerous they require their own warning labels?

The answer relates to the fact that short‐​term plans are providing lower‐​cost health insurance to some 3 million people who are either ineligible for other coverage options like ObamaCare or who find those options unaffordable.

The CBO reports that 95 percent of short‐​term plans are “comprehensive major medical polic[ies] that, at a minimum, cover[] high‐​cost medical events and various services, including those provided by physicians and hospitals.” Short‐​term plans basically “resemble a typical nongroup insurance plan offered before 2014, when many [ObamaCare] regulations … took effect.”

On some dimensions, short‐​term plans provide more comprehensive coverage than ObamaCare. The CBO reports that STLDI “may exclude some benefits that [ObamaCare] plans must cover [but] may have lower deductibles or wider provider networks.”

For consumers buying coverage outside ObamaCare’s enrollment periods, short‐​term plans provide more comprehensive coverage than all ObamaCare plans.

Short‐​term plans accomplish all this at a fraction of ObamaCare’s cost. The CBO finds that for many consumers, comprehensive short‐​term plan premiums are “as much as 60 percent lower than premiums for the lowest‐​cost [ObamaCare] plan.”

Such wonders are possible because Congress exempts short‐​term plans from ObamaCare and all other federal health insurance regulations.

In other words, markets are beating ObamaCare—and the regulators will not stand for it.

The Biden administration aims to destroy ObamaCare’s competition, even if it means some consumers will suffer—in the administration’s words—“potentially worse health outcomes.”

In King v. Burwell, the Supreme Court explained that “Congress passed the Affordable Care Act to improve health insurance markets.” Arbitrarily limiting short‐​term plans to less than 12 months directly conflicts with that goal because it makes health insurance worse.

The Biden administration should abandon this proposal, which is likely to spark a legal challenge. Congress shouldn’t wait for the other two branches to act. It should immediately codify the current rules for short‐​term plans, including allowing renewal guarantees.

The Department of Health and Human Services has said short‐​term plans with renewal guarantees could even reduce ObamaCare premiums. Which means codifying current rules would serve both Democrats’ and Republicans’ goals.

https://www.cato.org/commentary/when-regulators-hurt-people