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Biden’s Misguided Proposal to Restrict Health Options

Brian Blase
President at Paragon Health Institute

Brian Blase, Ph.D., is the President of Paragon Health Institute. Brian was Special Assistant to the President for Economic Policy at the White House’s National Economic Council (NEC) from 2017-2019, where he coordinated the development and execution of numerous health policies and advised the President, NEC director, and senior officials. After leaving the White House, Brian founded Blase Policy Strategies and serves as its CEO.

Today, President Biden will announce a proposed regulatory change that would reduce health coverage options, increase the number of people who are uninsured, and harm people who get sick. Specifically, the administration is targeting short-term health insurance and excepted benefit policies.
For more on the problems with the proposed rule, National Review just posted an op-ed from me. Here is the concluding paragraph:

President Biden assured Americans during his presidential campaign that, “If you have private insurance, you can keep it.” Unfortunately for the millions who currently have short-term plans as well as people who would benefit from them in the future, the Biden administration is poised to violate that campaign promise, severely restrict a good coverage option that costs taxpayers nothing, increase the number of Americans without health insurance, and potentially harm the Obamacare exchanges.

A variety of studies show the benefit of short-term plans and rebut many of the claims of people who seek to restrict them. Here are a few key points.
Short-term plans provide quality insurance. “[They] cover a significantly larger share of medical costs than ACA exchange plans for the same premiums,” in a study by Chris Pope of the Manhattan Institute.
Short-term plans reduce the number of the uninsured according to CMS, the CBO, the Center for Health Economy, the Urban Institute, and the Commonwealth Fund. “…all five studies agree [the number of uninsured Americans] will be significantly reduced – the estimates range from 200,000 to 3.7 million.”
Longer contract periods for short-term plans protect people who get sick. “If the proposed rule shortens [short-term] contract terms, limits the number or duration of renewals, and/​or prohibits renewal guarantees, it will gut consumer protections and throw sick patients out of the health insurance that is protecting them and their families,” in a recent piece from Michael Cannon, Cato’s director of health policy studies.
Obamacare markets have been stronger in plans that fully permit short-term plans. “States that permit short-term plans have lost fewer enrollees in the individual market, have had far more insurers offer coverage in the market, and have had larger premium reductions since the 2018 rule took effect,” according to a 2021 empirical study I conducted.
Wall Street Journal editorial from 2021 highlighted my study as well as Chris’s.

Mr. Blase compared states that allowed short-term plans to flourish with those that restricted them; California, for instance, banned the plans. States “that permit short-term plans have lost fewer enrollees in the individual market, have had far more insurers offer coverage in the market, and have had larger premium reductions since the 2018 rule took effect. The only states where individual market premiums have increased since 2018 are the five states that effectively prohibit short-term plans,” writes Mr. Blase.

The short-term rule is one policy change among other market dynamics; the effects are difficult to disentangle. But there’s no evidence of “sabotage.” Mr. Blase notes short-term plans could be making other insurers more efficient in order to compete—and that it’s better for the health of the individual market if those who fall ill are covered by short-term plans instead of then switching to ACA plans.

Chris Pope of the Manhattan Institute has also refuted the “junk” insurance charge, noting that often short-term plans offer broader doctor networks than their Obamacare counterparts. States have broad authority to regulate and deal with deceptive practices.

In a 2020 Health Affairs article, Doug Badger and I discussed Jeanne Balvin, a then 61-year old Arizona resident who was harmed by the Obama administration’s restrictions (undone by the Trump administration) on short-term plans.

Michael Cannon of the Cato Institute illustrated this point by recounting the story of Jeanne Balvin, a 61-year old Arizona resident:

In 2017, Balvin purchased an STLDI plan from UnitedHealthcare for $274 per month. It covered the entire cost of her emergency surgery for diverticulitis, minus a $2,500 deductible. Had she purchased an ACA plan, her premium would have been three times as high and her deductible in the range of $6,000.

Cannon also detailed how Balvin lost her coverage because of an Obama administration rule limiting the duration of short-term plans to three months, a rule that Democratic committee staffers have proposed to codify. The new rule on short-term plans left Balvin with $97,000 in hospital charges from two further hospitalizations related to her diverticulitis.

We also highlighted concerns that the National Association of Insurance Commissioners raised with Obama administration restrictions:

NAIC argued that restricting short-term plans would harm people whose three-month coverage expired and who acquired some condition or illness in their coverage period:

[I]f the person develops a new condition while covered under the first policy, the condition would be denied as a pre-existing condition under the next short-term policy. In other words, only the healthy consumers would have coverage options available to them; unhealthy consumers would not.

NAIC also argued that the Obama rule would not improve the individual market risk pool since healthy people could continue to get short-term coverage. “Only those who become unhealthy will be unable to afford care, and that is not good for the risk pools in the long run.”

The Biden administration’s misguided policies to limit health coverage have simply been proposed. There is a 60-day public comment period. Paragon will work to ensure that the public and policymakers understand the ramifications of these restrictions.

All the best,
Brian Blase
Paragon Health Institute

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