Hours ago, Illinois Gov. Bruce Rauner (R) vetoed legislation that would have subjected enrollees in short‐term health insurance plans to higher deductibles, higher administrative costs, higher premiums, and lost coverage. The vetoed bill would have blocked the consumer protections made available in that market by a final rule issued earlier this month by the U.S. Department of Health and Human Services, and would have (further) jeopardized ObamaCare’s risk pools by forcing even more sick patients into those pools.
Short‐term plans are exempt from federal health insurance regulations, and as a result offer broader access to providers at a cost that is often 70 percent less than ObamaCare plans.
Rather than allow open competition between those two ways of providing health‐insurance protection, the Obama administration sabatoged short‐term plans. It forced short‐term plan deductibles to reset after three months, and forced consumers in those plans to reenroll every three months, changes that increased administrative costs in that market.
The Obama administration further subjected short‐term plan enrollees to medical underwriting after they fell ill — which meant higher premiums and cancelled coverage for the sick. Prior to the Obama rule, a consumer who purchased a short‐term plan in January and developed cancer in February would have coverage until the end of December, at which point she could enroll in an ObamaCare plan. The National Association of Insurance Commissioners complained that the Obama rule required that her coverage expire at the end of March — effectively cancelling her coverage and leaving her with no coverage for up to nine months. The Obama administration stripped consumer protections from this market by expanding medical underwriting after enrollees get sick — something Congress has consistently tried to reduce.
Earlier this month, HHS restored and expanded the consumer protections the Obama administration gutted. It allowed short‐term plans to cover enrollees for up to 12 months, and allowed insurers to extend short‐term plans for up to an additional 24 months, for a total of up to 36 months. These changes allow short‐term plans to offer deductibles tallied on an annual basis, rather than deductibles that reset every three months. They spare enrollees and insurers the expense of re‐enrolling every three months. Most important, they allow short‐term plans to protect enrollees who get sick from medical underwriting at least until they again become eligible to enroll in an ObamaCare plan the following January.
Indeed, HHS clarified that because the agency has no authority to regulate standalone “renewal guarantees” that allow short‐term plan enrollees who fall ill to continue paying healthy‐person premiums, “it may be possible for a consumer to maintain coverage under short‐term, limited‐duration insurance policies for extended periods of time” by “stringing together coverage under separate policies offered by the same or different issuers, for total coverage periods that would exceed 36 months.” As HHS Secretary Alex Azar explains, this helps ObamaCare:
Our decision to allow renewability and separate premium protections could also allow consumers to hold on to their short‐term coverage if they get sick, rather than going to the exchanges, which improves the exchange risk pools.
I made that very argument in my comments on the proposed rule.
Illinois law automatically adopts whatever rules and definitions the federal government creates for short‐term plans. If Illinois legislators had just done nothing, millions of Illinois residents automatically would have had a health insurance option that is more affordable and provides better coverage than ObamaCare.
But this is Illinois.
In their infinite wisdom, Illinois legislators passed legislation that once again would have exposed short‐term plan enrollees higher deductibles, higher administrative costs, higher premiums, and cancelled coverage. The bill would have:
- Required that initial contract terms for short‐term plans last no longer than six months. It further provided that such plans could be extended for no more than six additional months.
- Mandated that consumers who wish to keep purchasing consecutive short‐term plans go uninsured for 60 days. Some consumers would inevitably develop expensive conditions during that period, and therefore be left with no coverage until the next ObamaCare open enrollment period.
- Prohibited renewal guarantees. The legislation specifically cut off this option. As a result, it would have dumped every single short‐term plan enrollee with an expensive illness into the Exchanges. Ironically, Illinois legislators who thought they were bolstering ObamaCare actually passed a bill that would have sabotaged it.
Thankfully, Gov. Rauner stopped this ignorant, ridiculous effort to deny consumer protections to short‐term plan enrollees. All eyes now turn to California, where Gov. Jerry Brown (D) must sign or veto legislation that would deny medical care to those who miss ObamaCare’s open enrollment period — by banning short‐term plans altogether.