Bare-bones, low-cost health insurance plans pushed by the Trump administration that critics say are inadequate are set to proliferate in the states as alternatives to the Affordable Care Act (ACA).
These plans, formerly limited to three months and designed to help people who switch jobs, have been extended to a year — technically 364 days — under an administration rule that takes effect Oct. 1. They could be renewed for up to three years.
Such low-cost plans don’t have to include specific benefits mandated by the ACA, such as prescription drug coverage. They also don’t have to cover people with pre-existing medical conditions, as the ACA requires.
State insurance commissioners, meeting in Boston a few days after the Health & Human Services Department promulgated the new rule, reacted warily.
“I have questions about the underlying value of these products,” California Insurance Commissioner Dave Jones said.
Troy Oechsner, deputy superintendent of the New York Department of Financial Services, called the low-cost plans “substandard products” that are sold on the premise that “junk insurance is better than nothing” for people who can’t afford comprehensive coverage.
But Trump administration officials say the plans will help people who can’t afford Obamacare premiums.
“This is a really important new option for millions of Americans,” HHS Secretary Alex Azar said in an interview on Bloomberg TV. He conceded the plans “may not be right for everybody.”
The new rule allows states to override HHS on the stripped-down plans, as eight states have already done. The plans are banned or limited to three months by state regulation or legislative action in Hawaii, Maryland, Massachusetts, New Jersey, New York, Oregon and Vermont. Connecticut requires that any short-term insurance include the benefits mandated by the ACA.
These eight states will soon be joined by California, assuming that Democrativ Gov. Jerry Brown signs Senate Bill 910 by state Sen. Ed Hernandez, D-West Covina, that bans short-term plans. Hernandez calls them “junk insurance.”
In Virginia, Democratic Gov. Ralph Northam vetoed legislation, SB 844, in May that anticipated the Trump administration rule and would have extended short-term plans to a year. In Washington the state insurance commissioner has initiated a rule-making process to clarify standards for short-term plans.
The number of states that opt out of the federal rule could go significantly higher. Dick Cauchi, director of health programs for the National Conference of State Legislatures, observes that most legislatures were out of session when the HHS rule was issued. He said he expects states to take “a fresh look” at health insurance plans when legislatures reconvene in 2019.
Defenders of the ACA see the stripped-down plans as the latest in a series of attempts by President Donald Trump to undermine Obamacare. Other actions shortened the enrollment period and eliminated government payments to insurance companies to defray the cost of subsidies for low-income ACA recipients.
“Never in modern American history has a president so transparently aimed to destroy a piece of major legislation,” law professors Nicholas Bagley of the University of Michigan and Abbe Gluck of Yale wrote in The New York Times.
“What makes Mr. Trump’s sabotage especially undemocratic is that Congress has repeatedly considered repealing the law — and repeatedly declined to do so. In addition, the Supreme Court has twice sustained the Affordable Care Act in the face of major legal challenges.”
Bagley and Gluck contend that Trump’s recurring attempts to undermine the law amount to “an unconstitutional usurpation of power.”
The cities of Chicago, Cincinnati and Columbus, Ohio, make a similar claim in a lawsuit filed last month in a federal court in Maryland. They ask the court to strike down the new rules and prevent Trump from taking further actions to “sabotage” Obamacare.
Adversaries of the ACA are also going to court. A federal district court judge in Texas has set Sept. 10 as the date for oral arguments in a case filed by Republican attorneys general and governors from 20 states. Among other things, this lawsuit argues that the ACA is unconstitutional because the tax bill passed last year by Congress eliminated, starting in 2019, a key provision of Obamacare: a tax penalty on those who fail to purchase health insurance.
One never knows what the courts will do, but both lawsuits seem a stretch. The elimination of payments to insurance companies to defray subsidies for low-income recipients caused some insurers to stop offering ACA policies and was indeed a blow to Obamacare. But the payments weren’t part of the original law; they came about through an executive action by Obama that Trump was under no obligation to continue.
The lawsuit filed by the attorneys general and governors seems equally dubious. Originally, these Republicans and their predecessors contended that the tax penalty for people who didn’t buy health insurance was a principal reason the ACA was unconstitutional. The Supreme Court rejected this argument when it upheld the law in 2012 in a 5-4 ruling written by Chief Justice John Roberts.
Now that the tax penalty has been eliminated by a Republican president and a Republican-controlled Congress, Republican attorneys general and governors say the law is unconstitutional without it. Good luck with this argument if the case ever reaches the Supreme Court.
On balance, considering the many attempts to repeal, replace or diminish it, Obamacare is doing pretty well. This year 11.8 million people obtained policies through the ACA, about 400,000 fewer than did in 2017.
Almost all of the reduction occurred on the marketplace, known as an exchange, run by the federal government at HealthCare.gov, which did very little to promote registration. Enrollment was unchanged in the 11 states and the District of Columbia that run their own exchanges and promoted their health insurance plans.
Open enrollment for coverage under the ACA in 2019 begins Nov. 1, five days before midterm elections that could well determine the fate of Obamacare.
Health care was a damaging issue for Democrats in the 2010 midterm elections, after the ACA had been passed but before it became operational. Republicans demonized the new law and gained control of Congress and many statehouses.
There’s a different dynamic at work in 2018. Democratic candidates for the Senate and outside groups have spent $17 million and aired nearly 56,000 ads focused on health care, far more than on any other issue, according to USA Today. In the ads the Democratic candidates promise to protect people with pre-existing conditions, fight for lower drug prices and preserve the ACA.
The No. 1 priority for Democrats this year is picking up the 23 seats necessary to gain control of the House of Representatives. Political analysts say this is likely; in 29 midterm elections dating back to 1902 the party out of power in the White House has won an average of 32 House seats.
Democratic control of the House would block any renewed attempt to repeal Obamacare although it wouldn’t prevent the Trump administration from further tinkering to weaken the law.
Whatever happens in the elections, the stripped-down, low-cost health plans in the states that permit them could prove an attractive alternative to Americans who feel priced out of health insurance by a steady string of double-digit premium increases.
Premiums for individual ACA recipients averaged $321 a month in 2018; premiums for a family of three averaged $833. The average annual deductible for individual plans was $4,358 and the average deductible for a three-person family plan was $7,983.
Individuals who made less than $48,240 or a family of three with household income under $81,860 were eligible for ACA subsidies in the form of tax credits.
The good news for those who obtain health insurance through the ACA is that premium increases will be less in 2019 than in the two prior years. The Wall Street Journal says that’s because of “the improved financial situation of many insurers’ ACA business.” In some states — Arizona, Illinois, North Carolina, Texas and Wyoming are cited by The Journal — premiums will even be reduced.
The leveling off of insurance premium costs in a majority of states should help the ACA stay competitive in the year ahead. Given the amount of opposition the law faces from the Trump administration, Obamacare needs all the help it can get.
— Lou Cannon, a Summerland resident, is a longtime national political writer and acclaimed presidential biographer. His most recent book — co-authored with his son, Carl — is Reagan’s Disciple: George W. Bush’s Troubled Quest for a Presidential Legacy. Cannon also is an editorial adviser to State Net Capitol Journal, which published this column originally. Click here to read previous columns. The opinions expressed are his own.
