A proposal by President Donald Trump’s administration to reverse an 11th-hour regulation from his predecessor curtailing a lower-cost health insurance alternative to Obamacare drew praise Tuesday from conservative policy analysts.
Just before President Barack Obama left office, the Department of Health and Human Services pushed through a regulation that limited the ability of people to buy short-term, limited-duration health insurance coverage plans.
Health and Human Services Secretary Alex Azar said Tuesday that his agency and the Department of the Treasury are proposing to renew and expand such plans as an option for Americans.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” Azar said in a statement. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump Administration is taking action so individuals and families have access to quality, affordable health care that works for them.”
The rule still must be finalized as part of a formal regulatory process before taking effect.
The low-cost, limited-duration plans typically keep premiums low by excluding people with pre-existing conditions. Such plans also are not subject to other regulations imposed by the Affordable Care Act, aka Obamacare.
The late-term action by the Obama administration put a three-month cap on how long those plans could last and forbade customers from renewing them. The proposed change, which comes after Trump in October signed an executive order directing officials to find ways to promote greater insurance competition, would allow customers to have such plans for as long as a year.
Trump administration officials are asking for public input before deciding whether to propose allowing the plans to be renewed by customers.
“I think the Trump administration is saying, ‘You know what? It’s probably better to have one of these short-term plans than none at all.'”
Doug Badger, a senior fellow at the free-market Galen Institute, told LifeZette that the proposed rule change is the latest evidence that Trump is moving wherever possible to undo Obamacare restrictions on the health insurance market.
“I think the Trump administration is saying, ‘You know what? It’s probably better to have one of these short-term plans than none at all,'” said Badger, who also is a visiting scholar at the conservative Heritage Foundation.
Badger said the Obamacare changes reflected Obama’s philosophy of one-size-fits-all health care.
“They want people to be either uninsured or have Obamacare policies,” he said.
Critics predicted the change would increase premiums in the individual market by siphoning off healthier customers and argued it could prompt insurance companies that offer more comprehensive plans to leave traditional insurance markets.
“This would let a parallel market for skimpy plans operate alongside the market for comprehensive individual health insurance, exposing consumers to new risks and raising premiums for people seeking comprehensive coverage, especially middle-income consumers with pre-existing conditions,” Center on Budget and Policy Priorities senior policy analyst Sarah Lueck wrote on the liberal think tank’s website.
But Badger said short-term, limited duration plans were ideal for healthy, younger people who lose group insurance because of a layoff. He said someone who loses his job currently have a choice of continuing to buy insurance under a former employer’s plan through the Consolidated Omnibus Budget Reconciliation Act (COBRA) or buying a plan on the government-run Obamacare exchanges.
Both are expensive, Badger said. By contrast, he said, short-term health plans are available with $1,000 deductibles.
“The coverage is relatively good,” he said.
Since congressional Republicans failed to repeal the Affordable Care Act, Trump has quietly searched for ways to lessen its impact. The tax cut bill Trump signed last year eliminates, beginning next year, the individual mandate that requires all individuals to have insurance.
The Trump administration also is working on two other regulations:
- One proposal, advocated by Sen. Rand Paul (R-Ky.), would let small groups create insurance-buying groups that could purchase policies across state lines and get the buying power of large companies. Badger said it would help smaller companies. The small group insurance market has shrunk by 24 percent since Obamacare passed, as small businesses dumped employees onto the Obamacare exchanges.
- A second proposal would expand health reimbursement arrangements, which give companies tax breaks to cover out-of-pocket health expenses of their employees. Under the plan, employers would be able to cover more costs, and it would apply to health insurance that does not meet Obamacare standards.