Tag: stldi

Baldwin Resolution Would Expose Sick Patients to Higher Premiums, Cancelled Coverage, Denied Care

The Senate appears poised to vote soon on a Congressional Review Act resolution sponsored by Sen. Tammy Baldwin (D-WI) that would rescind the Trump administration’s final rule on “short-term limited duration insurance.” Nearly every Senate Democrat has cosponsored the Baldwin resolution because they believe it would protect consumers. It would do exactly the opposite. 

The Baldwin resolution…

  • …would increase the number of uninsured. Various scholars have estimated that by making health insurance more affordable, the Trump short-term plans rule would reduce the number of uninsured Americans by up to 2 million. The Baldwin resolution would rescind that rule, thereby denying health insurance to up to 2 million Americans.
  • …would reduce protections for the sick. The Baldwin resolution would reduce consumer protections in short-term plans and expose sick patients to higher premiums, denied coverage, bankruptcy, and denied care. It would revert to the Obama administration’s 2016 short-term plans rule, which limited short-term plans to 3 months and banned renewals. As state insurance regulators noted at the time, “[There are] no data to support the premise that a three-month limit would protect consumers or markets. In fact, state regulators believe the arbitrary limit proposed in the rule could harm some consumers. For example, if an individual misses the [ACA] open-enrollment period and applies for short-term, limited duration coverage in February, a 3-month policy would not provide coverage until the next policy year (which will start on January 1). The only option would be to buy another short-term policy at the end of the three months, but since the short-term health plans nearly always exclude pre-existing conditions, if the person develops a new condition while covered under the first policy, the condition would be denied as a preexisting condition under the next short-term policy.” The Trump rule allows consumers to purchase coverage that lasts until the next ObamaCare open-enrollment period. The Baldwin resolution would result in that patient being re-underwritten and denied coverage and care for up to nine months.
  • …would not reduce ObamaCare premiums and could increase them. The Trump rule allows consumers to couple short-term plans with standalone renewal guarantees, which allow enrollees who develop expensive illnesses to keep paying healthy-person premiums. Since it gives expensive patients a lower-cost alternative to ObamaCare coverage, the Trump rule can reduce ObamaCare premiums by keeping expensive patients out of those risk pools. In contrast, the Baldwin resolution would force those expensive patients into ObamaCare plans, increasing the cost of ObamaCare coverage to both enrollees and taxpayers. In 2016, state insurance commissioners again explained the fundamental flaw of Baldwin’s approach: “If the concern is that healthy individuals will stay out of the general pool by buying short-term, limited duration coverage, there is nothing in this proposal that would stop that. If consumers are healthy they can continue buying a new policy every three months. Only those who become unhealthy will be unable to afford [short-term plans], and that is not good for the [ACA] risk pools in the long run.”
  • …would make short-term plans less comprehensive. The Baldwin resolution would not protect consumers from inadequate coverage. It would re-create the bad old days when excessive regulation blocked consumers from purchasing more-comprehensive short-term plans. The Congressional Budget Office writes that under the Trump rule only “a small percentage of [short-term] plans would resemble current STLDI plans, which do not meet CBO’s definition of health insurance coverage.” Instead, most short-term plans would “resemble[e] nongroup insurance products sold before the implementation of the Affordable Care Act” that offer “financial protection against high-cost, low-probability medical events.” In other words, the Trump rule allows the sort of health plans consumers want. The Baldwin resolution would make those products disappear again.
  • …would gut conscience protections. The Trump rule protects conscience rights by improving the market for short-term plans, which are exempt from ObamaCare’s contraceptives mandate. The Baldwin resolution would strip away those conscience protections.
  • …would not protect people with preexisting conditions. The Washington Post’s Paige Winfield Cunningham reports it “doesn’t exactly make sense” for Democrats to claim that restricting short-term plans helps patients with preexisting conditions. “Even with the expansion of these short-term plans, the marketplace plans guaranteeing preexisting protections will still be available to those who need them… So expanding the availability of short-term plans…doesn’t mean people with preexisting conditions would lose access to crucial coverage protections.”
  • …is pure symbolism. The Baldwin resolution has zero chance of becoming law. To rescind a final agency rule, Congressional Review Act resolutions must pass both chambers of Congress and receive the president’s signature. The House is unlikely to pass the Baldwin resolution. Even if it did, there is zero chance President Trump would sign a resolution nullifying a rule he himself asked his administration to produce.
  • is terrible politics. Or at least it could be, if opponents expose it as subjecting patients with expensive illnesses to higher premiums, cancelled coverage, medical bankruptcy, and denied care—all to serve supporters’ ideological goal of destroying a free-market alternative to ObamaCare.

Rauner Veto Preserves Consumer Protections in Short-Term Plans, Improves ObamaCare’s Risk Pools

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.

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Short-Term Plans Rule Flips the Political Narrative on Health-Insurance Protections

The usual narrative is that Democrats support consumer protections and Republicans oppose them. Today’s short-term plans final rule flips that narrative: Republicans are expanding consumer protections, and Democrats are opposing them.

Today’s rule reverses a 2016 Obama rule. The Obama rule reduced consumer protections in short-term plans by exposing sick patients to medical underwriting. Before that rule, consumers could purchase short-term plans that lasted 12 months. If they developed a serious illness, their plan could cover them until the next ObamaCare open enrollment period, when they could purchase coverage without medical underwriting. The Obama rule restricted short-term plans to 3 months. It prohibited “renewal guarantees” that protect enrollees who fall ill from medical underwriting when they purchased a new short-term plan. As a result, the Obama rule left short-term plan enrollees who got sick with no coverage for up to 9 months: those who purchased a plan in January, and developed a serious illness in February, would lose their coverage at the end of March, and have no coverage until the following January. (Source: NAIC) This was by design: the Obama administration wanted to expose sick people in short-term plans to medical underwriting and lost coverage as a way of forcing consumers to buy ObamaCare coverage instead. That’s at least a little messed up.

Today’s rule allows short-term plans to last 12 months and offer renewal guarantees. It therefore allows short-term plans to protect the sick from medical underwriting for an additional 9 months—indeed, “issuers may offer coverage under a short-term, limited-duration insurance policy for up to a total of 36 months, without any medical underwriting or experience rating beyond that completed upon the initial sale of the policy”—and allows renewal guarantees to protect them from medical underwriting indefinitely. Protecting the sick from medical underwriting has long been a goal of Congress.

So, to recap, Republicans are expanding consumer protections, and Democrats are opposing an expansion of consumer protections.

Weird, isn’t it?

Short-Term Plans Would Increase Coverage, Protect Conscience Rights & Improve ObamaCare Risk Pools

Any day now, the Trump administration will release a final rule allowing greater consumer protections in so-called “short-term, limited duration insurance,” a category of health insurance Congress exempts from federal health insurance regulations, including ObamaCare regulations. In comments I filed on the proposed version of the Trump administration’s rule and an accompanying Wall Street Journal oped, I explained some but not all of the benefits of allowing these consumer protections. What follows is updated and new information about the benefits of allowing those consumer protections.

Introduction

In 2016, the Obama administration arbitrarily prohibited certain consumer protections in short-term plans. First, it exposed sick consumers to underwriting and loss of coverage by shortening the maximum duration of short-term plans from 12 months to 3 months. Second, it prohibited “renewal guarantees” that would protect consumers who develop expensive illnesses from ever facing underwriting or losing their coverage.

Last year, President Trump urged the Department of Health and Human Services to allow short-term plans to last 12 months and to allow consumers to bridge together consecutive short-term plans with “renewal guarantees” that protect them from being re-underwritten after they get sick. With ObamaCare premiums soaring and the consulting firm Avalere warning of “substantial increases” in ObamaCare premiums for 2019, these consumer protections would mean “consumers could purchase health-insurance protection for 90% less than the cost of the average ObamaCare plan.“ Renewal guarantees would keep people with expensive conditions out of ObamaCare plans, thereby improving ObamaCare’s pools and reducing the cost of ObamaCare. Along the way, allowing these consumer protections would “increas[e] transparency in government and provid[e] voters and policymakers with better information about the cost of the ACA.”

HHS Can and Should Allow Short-Term Plans to Protect the Sick from Medical Underwriting

If you aren’t paying attention to the debate over short-term health insurance plans, you should. It’s a mixed-up, muddled-up, shook-up world where Republicans are pushing to expand consumer protections, Democrats are fighting to block them, and the public debate has it exactly backward.

In this morning’s Wall Street Journal, I explain:

ObamaCare premiums keep skyrocketing. Rate hikes as high as 91% will hit many consumers just before Election Day. Maryland insurance commissioner Al Redmer warns ObamaCare is in “a death spiral.”

So-called short-term health plans, exempt from ObamaCare’s extensive regulations, are providing relief. Such plans often cost 70% less, offer a broader choice of providers, and free consumers to enroll anytime and purchase only the coverage they need.

But there’s a downside. When enrollees fall ill, either their premiums spike or they lose coverage, leaving an expensive ObamaCare plan as the only alternative. Markets solved that problem decades ago via “renewal guarantees,” which allow enrollees who get sick to keep paying the same premiums as healthy enrollees.

For more than two decades, Congress has consistently tried to prevent sick patients from being to medical underwriting. Yet in 2016, the Obama administration did exactly the opposite. It issued a regulation that exposed enrollees in short-term plans to medical underwriting after they got sick:

In 2016, in an effort to force people into ObamaCare plans, the Obama HHS shortened the maximum duration for short-term plans from a year to three months and banned renewal guarantees. The National Association of Insurance Commissioners complained this reduced consumer protections and exposed the sick to greater risk, including the risk of having no coverage.

The Trump administration has proposed reversing the Obama rule and allowing short-term plans to offer both 12-month terms and renewal guarantees that allow enrollees who get sick to keep paying the same premiums as healthy enrollees (i.e., no more underwriting). Both of these proposals are consumer protections that would protect the sick from medical underwriting and in some cases protect the sick from losing coverage entirely. 

Believe it or not, Democrats are opposing these consumer protections! I am tempted to say their opposition is inexplicable, but it’s all-too explicable. Democrats want to prevent short-term plans from offering these consumer protections because they fear consumers will find short-term plans more attractive than ObamaCare. Democrats are literally trying to stop Republicans from expanding consumer protections because they would rather protect ObamaCare. 

Democrats Ask Trump Administration to Block Consumer Protections

In a recent letter to the Trump administration, leading congressional Democrats ask the administration not to allow protections for enrollees in short-term health plans.

Yes, you read that right. Dated April 12, the letter comes from Sens. Patty Murray (WA) and Ron Wyden (OR), as well as Reps. Frank Pallone (NJ), Bobby Scott (VA), and Richard Neal (MA), each the top Democrat on a different congressional committee with jurisdiction over health care. They ask the administration to withdraw in its entirety a proposed rule that, if implemented, would offer significant protections to enrollees in so-called “short-term limited duration plans.”

The administration has proposed lengthening the maximum term for such plans from 3 months to 12 months, which had been the limit for nearly two decades before the Obama administration shortened it. The administration has also asked for public comments (due April 23) on whether it should allow insurers to offer short-term plans with “renewal guarantees”—a consumer protection that allows enrollees who develop expensive illnesses to continue paying low, healthy-person premiums.

The letter asks the administration to “withdraw the proposed rule in its entirety,” which would block those consumer protections. These Democrats literally want to prevent short-term plans from giving consumers the peace of mind from knowing they will be covered for an entire year. Worse, these Democrats want to prohibit short-term plans from offering a consumer protection that protects the sick from premium spikes. 

The reason for this animosity toward short-term plans is rather clear: ObamaCare supporters don’t want the competition. Federal law exempts “short-term limited duration plans” from ObamaCare and other federal health-insurance regulations. Short-term plans free consumers to purchase only the coverage they want, rather than have ObamaCare force them to buy coverage they don’t want, including coverage for things they may find morally repugnant. ObamaCare supporters do not want consumers to have that freedom, because when consumers leave ObamaCare coverage for short-term plans, ObamaCare premiums will reflect more and more of the cost of that law.

The Emerging Graham-Cassidy 2.0 Proposal

Conservative groups including the Heritage Foundation are circulating a proposal that builds on legislation by Sens. Lindsay Graham (R-SC) and Bill Cassidy (R-LA) to overhaul ObamaCare. Even though I don’t know whether Graham and Cassidy have endorsed these updates, I will go ahead and call this proposal Graham-Cassidy 2.0. The proposal seems ill-advised, particularly since there is an alternative that is not only far superior in terms of policy, but also an easier political lift that would deliver more political benefit.

The key to evaluating any proposal to overhaul ObamaCare is to understand the law’s centerpiece is its pre-existing conditions provisions. Those provisions are actually a bundle of regulations, including a requirement that insurers offer coverage to all comers, restrictions on underwriting on the basis of age, an outright prohibition on underwriting on the basis of health, and a requirement that insurers treat different market segments as being part of a single risk pool. ObamaCare’s preexisting-conditions provisions have the unintended and harmful effect of penalizing high-quality coverage and rewarding low-quality coverage. ObamaCare contains other harmful regulations, but its preexisting-conditions provisions are by far the worst. Unless a proposal would repeal or completely free consumers from ObamaCare’s preexisting-conditions provisions, it is simply nibbling around the edges.

From what I have seen, Graham-Cassidy 2.0 nibbles around the edges.

To its credit, Graham-Cassidy 2.0 would zero-out funding for and repeal the entitlements to both ObamaCare’s premium-assistance tax credits (read: Exchange subsidies) and benefits under the Medicaid expansion. Unfortunately, it would not repeal that spending. Instead, it would take that money and send it to states in the form of block grants. The aggregate spending level for those block grants would grow more slowly over time than Exchange subsidies and federal Medicaid-expansion grants would under current law.

Limiting the growth of those spending streams seems like a better idea than letting them grow without limit, as current law allows. However, there is more downside than upside here.

First, Graham-Cassidy 2.0 would transform a purely federal spending stream into a intergovernmental transfer. At present, Exchange subsidies are payments the federal government makes to private insurance companies. Under Graham-Cassidy 2.0 (and 1.0), the feds would send those funds to states, which would use them to subsidize health insurance in various ways. Roping in a second layer of government diffuses responsibility and reduces accountability, regardless of whether the feds send those funds to states in the form of a block grant. Voters who don’t like how those funds are being spent would have difficulty knowing which level of government to blame, and whichever level of government is actually responsible could avoid accountability by blaming the other. Intergovernmental transfers are so inherently corrupting, there should be a constitutional amendment prohibiting them. And yet Graham-Cassidy 2.0 would substitute an intergovernmental transfer for spending with clearer lines of accountability.

Second, Graham-Cassidy 2.0 also diffuses accountability for ObamaCare’s preexisting-conditions provisions. Those provisions would continue to operate (with slight modifications). As a result, they would continue to destabilize the individual market, punish high-quality coverage, and reward low-quality coverage. The purpose of the Exchange subsidies is to mitigate that instability. Today, it is clear that Congress is responsible for any harm those provisions inflict, and the success or failure of the Exchange subsidies to mitigate those harms. Graham-Cassidy 2.0 would give that money to states and task them with mitigating those harms. When states fail to do so, as at least some states inevitably will, whom should voters blame? Congress, which started the fire? Or states, to whom Congress handed the fire extinguisher?

Third, while Graham-Cassidy 2.0 would eliminate two federal entitlements, eliminating entitlements is desirable only to the extent it limits government control over economic resources—in this case, spending. And while Graham-Cassidy 2.0 proposes to hold the growth of this repurposed ObamaCare spending below what it would be under current law, there is reason to doubt such a spending limitation would hold.

When examining the merits of any policy proposal, one must also consider the political dynamics the proposal would unleash. Generally speaking, states are a more politically powerful and sympathetic constituency than the current recipients of Exchange subsidies (private insurance companies). States have been able to use that political clout to get Congress to disregard the spending limits it imposed on SCHIP, for example, when so-called emergencies led states to blow through their initial allotments. Moreover, since Graham-Cassidy 2.0 would preserve ObamaCare’s preexisting-conditions provisions, it would come with its own built-in emergencies. As sure as the sun rises in the East, states will come to Congress and claim their block-grant allocations were insufficient to mitigate the resulting harms. Congress would be unlikely to say no—members rely on state officials for political support, after all—which means the spending restraints in Graham-Cassidy 2.0 are less than guaranteed.

Fourth, also pushing the direction of bigger government, Graham-Cassidy 2.0 would expand the constituency for ObamaCare spending. At present, the money the federal government spends on ObamaCare’s Medicaid expansion does not enjoy the support of the 19 states that have not implemented the expansion. The block grants in Graham-Cassidy 2.0, by contrast, would go to all states. As a result, non-expansion states like Texas would go from not caring about whether that federal spending continues to insisting that it does. At the same time, Graham-Cassidy 2.0 would expand the constituency of voters who want to preserve that spending. At present, able-bodied, childless adults in non-expansion states receive no benefit from ObamaCare’s Medicaid expansion or its Exchange subsidies. Graham-Cassidy 2.0 would allow (and in some cases require) states to provide subsidies to such adults below the poverty level, thereby creating another constituency that will reliably vote to expand those subsidies.

Fifth, a provision of Graham-Cassidy 2.0 that supporters consider a selling point would expand the constituency for more spending yet again. The proposal would require all states to allow all able-bodied, non-elderly Medicaid enrollees to use their Medicaid subsidy to purchase private insurance. Since greater choice would make Medicaid enrollment more valuable, and since roughly one third of people who are eligible for Medicaid are not enrolled, this would perversely lead to a large “woodwork effect,” where people who were previously eligible for Medicaid but not enrolled begin to enroll in the program. When Medicaid enrollment increases, so will Medicaid spending, and so will the population of voters who are willing to vote for higher Medicaid spending and the higher taxes required to finance it.

Since Graham-Cassidy 2.0 would preserve ObamaCare’s preexisting-conditions provisions, it is hard to see what would justify taking these one or two uncertain steps forward and multiple steps backward.

This is particularly true since there is a much better alternative on the table: strongly encouraging the Trump administration to allow insurers to offer short-term health insurance plans with renewal guarantees that protect enrollees from having their premiums increase because they got sick. Doing so would allow consumers to avoid all of ObamaCare’s unwanted regulatory costs, particularly those imposed by its preexisting-conditions provisions. The Trump administration can create this “freedom option” by administrative rulemaking—comments on the administrations proposed rule are due April 23—which is a much easier political lift than garnering 217 votes in the House and 51 votes in the Senate. Expanding short-term plans would also create salutary political dynamics that would force Democrats begin negotiating a permanent overhaul of ObamaCare.

As of today, Graham-Cassidy 2.0 just can’t compete with that cost-benefit ratio. Every ounce of energy spent on it, rather than on expanding short-term plans, is a waste.