It appears that former President Donald Trump has all but locked up the Republican presidential nomination after winning the New Hampshire primary. He has long vowed that, if elected, he will scrap and replace the Affordable Care Act. “We’re going to fight for much better healthcare than Obamacare,” he pledged while campaigning in Iowa earlier this month.
He’d do well to start by terminating the Biden administration‘s proposal to restrict short-term health plans to a maximum term of three months, with the possibility for a one-month renewal.
Democrats argue that short-term plans are “junk” coverage. In reality, they’re viable, affordable alternatives to exchange plans. That scares Democrats who want to protect the exchanges from competition.
Short-term plans don’t have to cover the 10 essential health benefits mandated under the Affordable Care Act. They also can consider an applicant’s health status and history when determining premiums.
Obamacare prohibits such medical underwriting and limits insurers from charging older beneficiaries more than three times what they charge younger ones. That has the effect of inflating costs for all but the sickest individuals.
As a result, short-term plans cost less than exchange coverage. This year, the average benchmark plan on the exchanges was $477 per month. Short-term plans cost an average of $208 per month, according to a USA TODAY analysis published earlier this month.
Enrollment in exchange coverage has ballooned recently. But that’s largely because the government picks up a chunk of the premiums for roughly four in five exchange enrollees. Nearly half of enrollees “have plans completely paid by taxpayers,” according to research from the Paragon Health Institute.
Expanding access to short-term plans could relieve pressure on taxpayers covering all those exchange subsidies — and even offer beneficiaries more comprehensive coverage.
It’s unlikely that these new enrollees are aware that exchange deductibles tend to be high and the networks of covered providers are small. According to research from the Manhattan Institute, premiums for short-term plans are lower than — and in some cases, almost half the cost of — premiums on the exchange for equivalent coverage.
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In 2018, the Trump administration advanced a rule that set the maximum term for a short-term plan at 364 days, with an option for renewal for up to three years. State regulators could limit the plans further. In 14 states — including California and New York — as well as the District of Columbia, short-term plans are not available at all.
If Trump wins the White House this fall, he should put his 2018 rule back in place. It would make health insurance more affordable for millions of Americans — just what President Barak Obama’s Affordable Care Act was supposed to do.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.