“A crisis of affordability.” That’s what is plaguing the individual health insurance market, according to Seema Verma, the administrator of the Centers for Medicare and Medicaid.
The culprit? Obamacare. The health law’s regulations have steadily driven up the cost of insurance. Between 2013 — the year before most of Obamacare’s provisions took effect — and 2017, premiums for individual plans doubled. They’re expected to jump another 15 percent next year.
The Trump administration is trying to address this by expanding the availability of inexpensive short-term insurance, which doesn’t have to comply with all of Obamacare’s cost-inflating rules.
Several states that lean blue aren’t interested, and are taking steps to undermine the president’s efforts. California is about to join them.
Apparently, they’d rather their residents pay ever-increasing sums for insurance — or go without it altogether if they can’t afford the coverage for sale on the exchanges.
Short-term health plans are designed to be stop-gaps that offer some level of protection against medical catastrophe during a time of transition. Think of a college student taking time off from school, or a worker between jobs.
Traditionally, short-term plans could last up to a year. But, in 2016, the Obama administration shortened that period to just three months. Officials wanted to force people who might have found cheap short-term coverage appealing to buy comprehensive insurance on the exchanges. The administration needed premiums from the healthy to subsidize coverage for the sick, whose costs of care far exceeded their premiums — premiums capped by Obamacare.
In a rule finalized this summer, the Trump administration restored the old year-long limit for short-term plans. The rule also allows insurers to renew policies, up to a total of 36 months.
The Congressional Budget Office estimates that about 2 million people will purchase short-term health plans by 2023. About 35 percent of them would have been uninsured, the agency estimates, without the rules.
Those 2 million people will flock to short-term plans because they’re about half the cost of an average exchange plan. That’s in part because they don’t have to cover things like maternity care or substance abuse treatment.
Critics have dismissed short-term plans as “junk,” saying that they’re part of an effort to “sabotage” Obamacare’s exchanges.
But for most people, the alternative is no insurance at all.
Over the last year, roughly two in three uninsured people who visited HealthCare.gov but declined to buy insurance cited high costs as the reason.
Unfortunately, several states — including Connecticut, Hawaii, Maryland, New York, Vermont and Virginia — have been swayed by the “junk” hysteria and have taken steps to counteract the Trump administration’s new rule.
California is next. State Sen. Ed Hernandez, D-West Covina, is pushing a bill, SB 910, outlawing insurance that lasts less than a year, claiming that short-term plans would “destabilize our insurance market.”
The Senate passed his bill a few weeks ago, and the Assembly green-lit it by a vote of 51-21 on Aug. 16. On Monday, the Senate agreed with the Assembly’s amendments and sent the final measure to Gov. Jerry Brown for his signature.
Over 2 million Californians are insured through the individual market. Next year, their premiums will jump nearly 9 percent. And leaders are responding by forbidding them from purchasing more affordable coverage.
The Trump administration is trying to provide people with an alternative to the premium spirals caused by Obamacare. States shouldn’t stand in the way.