Donald Trump and the Republicans are using a back door, an ACA loophole to bring back junk health insurance policies. These insurance policies only work when you are not sick, providing you with a false sense of security. Here is what they are and why people are fooled into buying them.
I explain in the video at the end of this article the pathology of junk health insurance and why folks buy it. It is a perfect illustration of the rationale behind Single-Payer Medicare for All. It is clear that this ACA sabotage is intent on destroying Obamacare with another slice of many.
HHS posted a press release on August 1st, 2018 at their site titled "HHS News Release: Trump Administration Delivers on Promise of More Affordable Health Insurance Options" that said the following.
On Wednesday, the departments of Health and Human Services, Labor and the Treasury issued a final rule to help Americans struggling to afford health coverage find new, more affordable options. The rule allows for the sale and renewal of short-term, limited-duration plans that cover longer periods than the previous maximum period of less than three months. Such coverage can now cover an initial period of less than 12 months, and, taking into account any extensions, a maximum duration of no longer than 36 months in total. This action will help increase choices for Americans faced with escalating premiums and dwindling options in the individual insurance market.
“Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle,” said Health and Human Services Secretary Alex Azar. “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
In a recent release of three reports on the current state of the individual insurance market, Centers for Medicare & Medicaid Services (CMS) data reveal serious problems. While enrollment data show stable enrollment for subsidized exchange coverage, the number of people enrolled in the individual market without subsidies declined by an alarming 20 percent nationally in 2017, while at the same time premiums rose by 21 percent. Many state markets experienced far more dramatic declines, with unsubsidized enrollment dropping by more than 40 percent in six states, including a 73 percent decline in Arizona.
These troubling trends were besetting individual markets as President Trump took office, which led the President to issue the executive order “Promoting Healthcare Choice and Competition Across the United States” in October 2017. The executive order seeks to address the failings of the ACA, which severely limited the choice of healthcare options available to many Americans and produced large premium increases in many state individual markets for health insurance.
“We continue to see a crisis of affordability in the individual insurance market, especially for those who don’t qualify for large subsidies,” said CMS Administrator Seema Verma. “This final rule opens the door to new, more affordable coverage options for millions of middle-class Americans who have been priced out of ACA plans.”
Short-term, limited-duration insurance, which is not required to comply with federal market requirements governing individual health insurance coverage, can provide coverage for people transitioning between different coverage options, such as an individual who is between jobs, or a student taking time off from school, as well as for middle-class families without access to subsidized ACA plans. Access to these plans has become increasingly important as premiums have escalated for individual market plans, and affordable choices for individuals and families have dwindled.
The average monthly premium for an individual in the fourth quarter of 2016 for a short-term, limited-duration policy was approximately $124, compared with $393 for an unsubsidized individual market plan.
Slate points out that these policies will cause marketplace insurance rates to rise.
What the administration fails to mention, of course, is that Obamacare premiums are rising thanks largely to the White House’s own attempts to sabotage the law, which, judging from data on patient expenses and premiums, had finally started to stabilize in 2017. And as the administration itself has admitted, expanding the market for short-term insurance could make premium hikes worse. Routing young, healthy insurance shoppers away from the Obamacare exchange will skew that market further towards sick, unprofitable patients, forcing carriers to raise their prices in order to make a profit.
And why are these policies bad?
Short-term health plans are often dismissed as junk insurance, and for good reason. They were originally meant as a temporary option for people who found themselves with a brief break in their coverage, such as after losing a job. Unlike the coverage sold on Obamacare’s exchanges, they are not required to offer a minimum-benefits package; they can leave out things like maternity care, mental health, or prescription drugs. They can cap coverage and impose higher deductibles. Carriers also underwrite them, meaning they are permitted to charge customers more—or reject them outright—based on their health.
Because they can offer skimpy benefits to a narrow group of healthy customers, these plans are naturally attractive to people without much in the way of immediate medical needs. (Of course, when those people get sick, they may feel differently.)The Obama administration clamped down on the plans in 2016 by limiting their duration, after it realized that they were drawing younger, healthy adults away from market Affordable Care Act’s market. This was happening despite the fact that the policies plans did not count as health insurance for the purposes of fulfilling the law’s individual mandate, meaning people who relied on them still got stuck paying a tax penalty. Such was the allure of dirt-cheap insurance.
By letting insurance companies offer these plans for up to three years, the Trump administration is basically taking the “short” out of short-term. Because Republicans also eliminated the individual mandate as part of the tax law they passed last year, there’s also no longer a financial incentive to buy comprehensive coverage through the exchanges instead of a “limited duration” plan. Between those two moves, Trump and his GOP allies are essentially legalizing the very bare bones coverage Obamacare was designed to wipe out.
And here is why insurance selling junk health insurance is successful
Right now when you see your health care bill, for those of you who are under the marketplace, you're gonna see that they go really high. But they've also allowed something, cheap insurance. You remember those insurance policies that you could find, and it looked like it was too cheap? But you know you couldn't help but buy it because you got insurance now and it costs a lot less than the others? Trump is allowing that back onto the market. What it really means is that you'll have coverage that isn't worth the paper it's written on.
The health insurance market is a mess. Trump has destroyed it, and he's used every loophole in the Affordable Care Act to bring in products to destroy it. And you have to be careful of what you're buying because here's the problem. At any given time most people are healthy. Right? They don't need to use health care in a very major way so at any given time you'll only have let's say 20% of people that are gonna notice how bad the policies are that they're purchasing. I can sell millions of junk insurance policies, and it's okay if 20% percent of those people have problems. You know why? It's not enough to mess with an election. And for those who didn't use insurance and only had to pay a cheap price for it, hey, they only paid a cheap price.
Now, remember, if a hundred people are using insurance and all that hundred people buy junk insurance and twenty of those people get sick, there are pissed-off people because they realize insurance is junk. But there are people that are not pissed off, and they're not pissed off because if they had real insurance, they would have spent a lot more than they're spending right now. So they got a break because they didn't get sick and they bought junk, so they didn't get a chance to feel bad about buying junk. But they still save money. Because we don't know who specifically is gonna get sick, nobody should have junk insurance. But those 20% who bought junk insurance and didn't have to use it are happy because, in reality, they did save money. And that is why you need single-payer Medicare for all because that is where you have a system where everybody has the same skin in the game proportionally that is. Because then, nobody will feel cheated.
You see, I tell you something. That person who bought that junk insurance policy who then has to use it and that person who bought the expensive good insurance that didn't have to use it, the person who bought junk feels, 'Hey, I got me a deal.' The person who was responsible and bought important insurance, they sit down and say 'Damn. Since I didn't get sick, I should have just bought the junk.' That's what we need complete nationalized Single-payer Medicare for all.
Watch the full episode of Politics Done Right below.