Trump Administration Attempts to Loosen ObamaCare’s Grip

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In this edition of Health Policy News Roundup, Dr. Jane Orient dives into the implications of increased flexibility for Association Health Plans and Short Term Limited Duration Insurance. 

Association Health Plans

The Labor Department just released rules for association health plans (AHPs).  “Many of our laws make healthcare coverage more expensive for small businesses than large companies. Association Health Plans are about more choice, more access, and more coverage,” said Secretary of Labor Alexander Acosta. https://www.dol.gov/general/topic/association-health-plans

It is estimated that by 2022 AHPs would cost $8,700 to $10,800 less per person per year than individual market plans, according to an Avalere study. It is estimated that as many as 4.3 million people might leave the individual and small group insurance markets to enroll in AHPs over the next five years. http://www.modernhealthcare.com/article/20180228/NEWS/180229908

ObamaCare advocates write, “It’s part of a broader effort by President Trump and his allies to peel away the Affordable Care Act [ACA] even as it remains the law of the land….  The move could be characterized as sort of an ‘Obamacare Repeal Plan B’ made up of efforts by Trump appointees to pull back on the law administratively now that Congress has failed to eliminate the ACA.” https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2018/06/19/the-health-202-the-trump-administration-will-allow-people-to-buy-cheaper-health-plans-but-they-won-t-have-certain-obamacare-benefits/

“Traditionally, association health plans have always been a terrible idea that violates Republicans’ federalist principles, because they would move health-insurance regulation from the state level to the federal level,” writes Michael Cannon of the Cato Institute. “But since ObamaCare went ahead and federalized regulation of small-business health plans, and the association-health-plans rule merely allows small businesses to opt for lighter versus heavier federal regulation, association health plans no longer violate federalism. Credit ObamaCare with making a bad idea good.” Cannon also notes that AHPs build on “the broken model of employer-sponsored health insurance.”

If healthy people flee the Exchanges. ObamaCare premiums will rise even faster. ObamaCare supporters call this “sabotage.” Cannon calls it transparency. This is a threat because, as ObamaCare architect Jonathan Gruber admitted, “the public would have rejected the law (and still might!) if they could actually see what it does.” https://www.cato.org/blog/trumps-ahps-rule-generally-lousy-idea-would-reduce-premiums-some-make-obamacares-costs-more

The state of Iowa is attempting to use this route to free its citizens from crippling ACA premiums. https://townhall.com/columnists/ariannawilkerson/2018/03/13/draft-n2460228

Short-Term Medical Plans

The Trump Administration is also rolling back the Obama rule that limits short-term medical plans (STMs) to 90 days. Plans lasting 364 days will now be available. Free of costly regulations, such plans often cost 70% less than ACA-compliant plans. The problem is that if enrollees fall ill, their premiums spike, or they lose coverage. Markets solved that problem decades ago, Michael Cannon writes,  via “renewal guarantees,” which allow enrollees who get sick to keep paying the same premiums as healthy enrollees—at the cost of about $86/month. Obama’s HHS department banned them, and President Trump has asked Secretary Alex Azar to reverse this ruling. https://www.wsj.com/articles/a-chance-to-overcome-obamacare-1527517284

With the individual mandate effectively repealed, an estimated 4.6 million people might flee from the exchanges, saving an astonishing $338 billion over 10 years from undisbursed subsidies.  But while Americans can escape ObamaCare, they still can’t buy insurance in the individual market independent of ObamaCare because private insurers are prohibited from selling it. State waivers are one way to restore the freedom to buy insurance if Congress is unwilling to restore this freedom nationwide.  STMs are the vehicle most likely to obtain a waiver.

Democrat leaders in Congress were quick to recognize that Idaho’s proposed plan to grant health-care freedom to its citizens posed a mortal threat to ObamaCare.  “If more than 40% of people enrolled in the exchanges are expected to flee even when the only alternative is to become uninsured, we can expect the number exiting the exchanges to grow substantially when private alternatives are made available,” writes Phil Gramm, a former chairman of the Senate Banking Committee. https://www.wsj.com/articles/how-to-complete-the-escape-from-obamacare-1521153431

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