Last year , much of the country watched with growing fury as Republicans tried to undo President Barack Obama’s signature achievement, the Affordable Care Act.
Americans stormed town halls. They jammed congressional phone lines. Some got hauled off to jail for acts of civil disobedience. Bill after bill attempting to dismantle Obamacare imploded. By October, it looked like Republicans had given up at last.
How wrong that was.
In the months since the last Obamacare vote in the Senate, the Trump administration and Republicans on Capitol Hill have engaged in a sneakier, backdoor repeal.
It’s been less telegenic than those big congressional fights, but it has been more destructive.
In fact, next year there will be about 9 million fewer Americans with real health insurance coverage than would have been the case had pre-Trump policies stayed in place, according to a report released Monday by the Urban Institute.
By “real health insurance,” I mean plans that actually cover things — as opposed to plans that just take your money and then, legally, pay few if any claims. (These are sometimes nicknamed “buffalo plans,” because they pay out pretty much only if you get run over by a herd of buffalo.)
A handful of relatively low-profile, boring-sounding actions are to blame for the drop-off in the insured. They include repealing the individual mandate (which encouraged young, healthy people to buy insurance, holding down premium costs for the overall pool), shortening the open enrollment period, reducing outreach and advertising, and killing subsidies designed to help pay for low-income people’s out-of-pocket spending.
Then last week, with little fanfare, the Trump administration released an even-more-damaging new policy: an expansion of “short-term” insurance plans.
Short-term insurance is supposed to provide just that — short-term coverage. Maybe you need a stopgap plan before school starts, for instance. These niche plans are exempted from Obamacare’s basic consumer protections.
They don’t, for example, have to be issued to people with preexisting conditions. There also are no federal requirements for what kinds of care they have to cover, or how much of it. If these plans want to take your premium money and then never pay out a dime on prescription drugs or cancer treatments, under federal law, they don’t have to.
And the data show they often don’t, which is why this is such a lucrative business to be in.
In 2016, the top seller of short-term plans, Tokio Marine Holdings, paid out only 47 cents of every dollar it received from premiums on medical claims, according to the National Association of Insurance Commissioners. Obamacare-compliant plans, for context, generally have to spend at least 80 percent of their premiums on claims and quality improvement.
These lightly regulated, short-term plans are typically much cheaper than Obamacare-compliant ones. But the reason they’re so cheap — the fact that they cover so little — is not always apparent when they’re being sold. Predictably, many consumers have gotten scammed. In some particularly egregious cases, insurers pulled coverage immediately after a cancer diagnosis or heart attack. State insurance regulators have issued warnings to residents about widespread fraud.
“A lot of this stuff has been sold by con artists,” says Sabrina Corlette, a scholar at Georgetown University’s Health Policy Institute.
The Obama administration tried to address these problems by restricting short-term plans to no more than three months. But under the Trump administration’s newly released rule, they would be allowed to expand up to 364 days.
This will have a few major consequences.
First, it will become even harder for consumers to tell the difference between plans that actually pay for things and those that don’t.
Second, for all the Trump administration’s rhetoric about improving mental-health care, fewer people will have access to it. After all, unlike ACA-compliant plans, short-term plans don’t have to cover mental illness.
Third and most important, it will further destabilize the individual insurance markets.
These not-so-short-term short-term plans will siphon off more young and healthy people from the exchanges. The older, more expensive enrollees who remain will cause premiums to spike; more young and healthy people will drop off the exchanges; prices will rise further; and so on.
Hence the predicted decline in the number of nonelderly Americans with real, non-buffalo insurance.
Meanwhile, even as all these various backdoor repeal policies reduce the number of people with insurance, federal health spending on non-elderly Americans will go up. In fact, it will be $33 billion higher than would have been the case under previous law, according to the Urban Institute. That’s because as premiums rise, subsidies rise automatically, too.
What, you thought gutting Obamacare would at least save the government some money? Well, consider yourself buffaloed.
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