Despite the Trump administration's best efforts to undermine and bad-mouth Obamacare, it is not collapsing, as the president often claims. The state exchanges where insurers sell policies to Americans who don’t get health benefits at work are stabilizing, and enrollment remained about the same last year even after administration actions drove up premiums, slashed marketing efforts and shortened the sign-up period.
Yet the White House and congressional Republicans are undaunted, and their efforts to lay waste to Obamacare are continuing. They’ve taken a series of steps in recent months aimed at helping healthier people cut their spending on insurance. But in each case, their approach would rob Peter to save some bucks for Paul, shifting costs from the healthy onto those who need comprehensive health coverage.
The most recent came Tuesday, when Health and Human Services Secretary Alex M. Azar II proposed a new rule easing the limits on temporary policies that can carry significantly lower premiums. These plans don’t have to comply with Obamacare’s insurance reforms, which means they typically provide much less coverage — and that they may not be as cheap, or as available, for people with preexisting conditions. The Obama administration put a three-month limit on the duration of such policies. The new rule would allow “temporary” plans to continue for up to 364 days (and then be applied for again for the following year), making them an appealing alternative for those who don’t want or need comprehensive insurance.
The proposal reflects the approach taken by Trump and many other Republicans to the rapid rise in insurance premiums for those not covered by a large employer’s plan: Let insurers offer thinner policies for less money to people who don’t need much care. Doing so, however, means that healthier people will abandon the state Obamacare exchanges, leaving them mainly to people who have preexisting conditions or need on comprehensive coverage. The former save money, the latter see their premiums rise even faster.
Oh and yes, it would likely cost the taxpayers more. The vast majority of the people who shop in the Obamacare exchanges are low- to moderate-income Americans who receive federal subsidies; when premiums go up, their subsidies rise to cover the increase.
That’s just one of the wrongheaded aspects of the proposal. The way to reduce premiums in that market is to pool risks more broadly by bringing more healthy people in. But seemingly every step the administration and Congress have taken lately has drawn healthy people out of the exchanges. This includes ending the requirement that virtually all Americans obtain insurance (as of 2019) and letting loosely defined associations offer plans that, like the temporary policies, don’t comply with Obamacare. This nasty trend is likely to continue until voters make it stop.