Trump rolled back that order in 2018. His administration permitted insurers to sell policies that lasted up to a year and were renewable for up to three years.
The market has since taken off. An estimated 3 million Americans purchased short-term plans in 2019 — an increase of 600,000 over the previous year. It’s no secret why. Whereas the average monthly premium for the lowest-cost bronze exchange plan was $331 last year, consumers could enroll in a short-term plan for less than $100 a month.
All of which brings us to the incoming Biden administration. The president-elect has condemned short-term plans as “junk.” A return to the pre-Trump status quo might seem like a chance for an easy win early in his presidency.
But the notion that short-term plans don’t measure up to their Obamacare-compliant peers is misinformed. According to a 2019 analysis by the Manhattan Institute’s Chris Pope, many short-term plans offer a level of coverage that’s equivalent to exchange plans, sometimes at nearly half the price.
Further, many people have lost their jobs and hence their employer-sponsored coverage because of the pandemic-induced economic crisis. Relatively inexpensive short-term coverage has been invaluable for many of these folks, especially those unable or unwilling to pay for pricey coverage via COBRA or the exchanges.
It’s true that some short-term plans are less comprehensive than those available on the exchanges. But some level of health coverage is better than no coverage at all. And many Americans have already declared that they’d rather be uninsured than pay top-dollar for exchange coverage.
Between 2016 and 2018, 2.5 million Americans ineligible for subsidized exchange coverage fled the exchanges. Their decisions make sense, given that many of them were looking at paying $20,000 out of pocket in premiums and deductibles before their insurance kicked in.
Biden has promised to make subsidized coverage available to millions more Americans, at a cost in the billions. People wouldn’t have to spend more than 8.5% of income on premiums, and federal subsidies would be based on the cost of more comprehensive gold plans, rather than silver ones, as under current law.
But it makes little sense to spend billions papering over Obamacare’s cost-inflating flaws when keeping the Trump administration’s short-term rule in place would ensure that millions of people continue to have access to affordable coverage — at no cost to taxpayers.
Biden has been in politics a long time. Perhaps he’ll think twice about starting his presidency off by eliminating one of the few affordable coverage options people have — and offering them nothing in return.
Sally C. Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020).”
Why Joe Biden must keep Donald Trump’s short-term health plans in place
Sally C. Pipes
President-elect Joe Biden has promised “a dramatic expansion of health care coverage and bold steps to lower health care costs” once he takes office after his inauguration Jan. 20. But one of his first orders of business may undermine both those goals in one fell swoop.
The incoming administration has signaled its intention to roll back President Donald Trump’s expansion of short-term health plans. These plans have been a rare source of low-cost coverage for millions of Americans unable to find affordable insurance on Obamacare’s exchanges.
Short-term plans are less expensive because they’re not subject to Obamacare’s cost-inflating mandates and regulations. They don’t have to provide coverage for Obamacare’s 1 essential health benefits. They can also vary premiums according to a person’s health status and history.
As a result, they’re about 80% cheaper than exchange plans, according to an industry study. In 2016, the final year of the Obama administration, the average monthly premium for an individual short-term plan was $110, compared to $363 on the Obamacare-compliant individual market.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.