PIPES: A Short-Term Solution To Our Long-Term Health Insurance Affordability Problems

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Sally Pipes President & CEO, Pacific Research Institute
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President Biden hit the road last week to castigate Republicans for supposedly proposing to make healthcare more expensive.

The president is upset that Republicans want to undo the innovation-destroying price controls on prescription drugs included in Democrats’ Inflation Reduction Act and rein in the billions of dollars in subsidies he’s handing out to prop up Obamacare’s exchanges.

He’s conveniently ignoring some of Republicans’ own ideas for making health insurance more affordable. In a recent opinion piece, Rep. Michael Burgess, R-Texas — a member of the House Energy and Commerce Committee and part of the House Doctors Caucus — and co-author Eric Hargan outlined some of those ideas. Among them is boosting access to short-term and association health plans, both of which tend to be much more affordable than the coverage available through the exchanges.

Short-term and association health plans cost less than conventional health plans because they’re exempt from Obamacare’s many cost-inflating mandates.

For instance, the law dictates that all health plans must cover a list of 10 “essential” health benefits — including everything from maternity care to substance abuse treatment — regardless of whether a consumer wants or needs them.

Obamacare also requires insurers to sell to all comers, regardless of health status or history, and forbids them from charging the old any more than three times what they charge the young.

The effect of all these rules was to essentially outlaw the minimalist, low-cost health plans that many people — especially the young, small employers, and those between jobs — prefer.

Republicans fought back during the Trump administration by relaxing regulations around short-term plans. They permitted such plans to last up to a year and gave insurers the green light to renew them for up to three years. This move enabled people to use short-term plans as substitutes for the expensive health plans on Obamacare’s exchanges.

Soon after President Biden took the White House, congressional Democrats began lobbying the administration to rescind the Trump-era rules expanding access to short-term plans, which they’ve branded as “junk insurance.”

That smear campaign continues to this day. Just last month, three high-ranking Democratic lawmakers — Reps. Frank Pallone, Jr. of New Jersey, Anna G. Eshoo of California, and Kathy Castor of Florida — wrote President Biden to assert that short-term plans “present a threat to health and financial well-being of American families.”

But the notion that short-term plans are somehow worse than exchange plans is far from obvious.

Research conducted by the Manhattan Institute’s Chris Pope has found that short-term plans can provide coverage comparable to that of exchange plans — sometimes at a fraction of the price. Most of Obamacare’s essential health benefits, with the exception of maternity care, are widely available on the short-term market. Moreover, short-term plans generally lack the restrictive provider networks characteristic of exchange coverage.

The GOP’s effort to expand access to association health plans has also met fierce Democratic opposition. These are arrangements in which small businesses or self-employed individuals join together to purchase coverage in the large-group market. The Trump administration loosened the requirements for joining such AHPs and opened up a new range of coverage options for businesses around the country.

The U.S. Circuit Court of Appeals for the D.C. Circuit struck down the Trump-era AHP rule in 2019. But the Trump administration appealed, and the future of association health plans remains in limbo. In just the last few days, Democrats in the House have pushed Biden to rescind the rule entirely.

The president should go the other way — and allow for more AHPs. Small businesses are clamoring for them, given the dearth of affordable health plans available on the market.

Expanding access to short-term and association health plans is a tangible way lawmakers can give people more affordable insurance choices. That’s a path Republicans should continue to work toward — and one that Democrats have made clear they oppose.

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). Follow her on Twitter @sallypipes.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.