Amid the wrangling over the budget omnibus that must pass Congress by the end of next week to avoid a government shutdown, lawmakers are locked in a heated debate about whether to prop up or further chip away at Obamacare’s individual market.
Dueling proposals recently introduced in the Senate take aim specifically at the question of cheap, deregulated, short-term health insurance plans, which are expected to lure younger and healthier people out of the ACA market and drive up premiums for those who remain.
A Democratic bill would sharply limit those short-term plans and force them to adopt Obamacare’s protections for people with pre-existing conditions. But a Republican effort, supported by the White House, wants to go in the opposite direction. It seeks to extend the length of short-term plans and make them renewable, essentially making the short-term plans indistinguishable from regular insurance plans and creating a entire shadow health care market free from the ACA’s rules and regulations.
“It’s a trapdoor out of Obamacare,” Sen. John Barrasso (R-WY), the author of the pro-short-term provision, explained to TPM. “It lets people buy what works for them and their families—what they want, not what the government wants them to have.”
Barrasso says he’s actively lobbying GOP leaders to tuck his new bill into the upcoming budget omnibus, but doesn’t yet know if it will be included.
“I’m continuing to work for that,” he said. “If you want to lower the cost of health insurance and give people more options and more freedom, it’s the way to go. I heard from the administration that they like it quite a bit. They’re very supportive of it.”
A White House official confirmed their enthusiasm for Barrasso’s bill to TPM, saying: “We are supportive of the Senator’s efforts to increase consumer choices by codifying that short-term limited duration insurance can be renewable. These plans are free from Obamacare’s mandates and generally cost about 70 percent less than Obamacare.”
But Sen. John Thune (R-SD), a member of the Senate’s leadership team, hedged Wednesday when asked by TPM whether the provision will make it into the omnibus.
“Everybody’s trying to hitch a ride on the omni right now, and there’s an awful lot of moving parts still there,” he said. “Could Barrasso’s stuff get on there? Maybe. There’s a lot of trading happening now.”
Barrasso and the White House are correct that skimpy short-term plans are far cheaper than their comprehensive counterparts, but they fail to mention that the plans can charge people more or turn them away based on their gender or health status, and can refuse to cover Obamacare’s essential health benefits like prescription drugs or emergency room visits, leaving people with much higher out-of-pocket costs.
Under the Obama administration, consumers could only be on short-term plans for 90 days. Trump’s HHS released a draft rule in February allowing the plans to last up to 364 days, and Barrasso’s bill would make them last a full year with the option of renewal—no different from regular health insurance.
A group of health insurance industry heavyweights, including America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association, wrote an open letter warning that the move “could create or expand alternative, parallel markets for health coverage, which would lead to higher premiums for consumers, particularly those with pre-existing conditions.”
This has been a cause for alarm for lawmakers like Sen. Tammy Baldwin (D-WI), who told TPM she views the proposed proliferation of the short-term plans as a fundamental threat to the ACA market.
“The junk plans are troublesome enough, but making them longer-term and renewable would be very negative,” she said.
Baldwin recently introduced a opposing bill to Barrasso’s that would reimpose the 90-day limit on short-term plans. It would also force the plans for the first time to comply with some Obamacare rules, meaning they would have to cover essential health benefits and preventative services, couldn’t turn someone away or charge them more because of their gender or a pre-existing condition, and couldn’t set annual or lifetime limits on their care costs.
Baldwin does not yet know if her proposal will be included in the bigger ACA stabilization package senators are putting together in hopes of getting it included in the omnibus, but she is pushing for it to be in there.
If the GOP-controlled Congress goes in the other direction, embracing Barrasso’s bill to elevate the short-term plans to the level of regular health insurance, some Democrats say it could put the passage of the omnibus in jeopardy.
“I cannot support junk plans. I cannot support the erosion of patient protections with regard to pre-existing conditions,” said Rep. Frank Pallone (D-NJ), the top Democrat on the House’s Energy and Commerce Committee, which handles health policy. “We want to strengthen the ACA, and what the Republicans are proposing weakens it. It weakens people’s access to health care.”
“I think it’s very wrong to sell these junk plans, because then, essentially, people are under-insured and they might not have the money to pay for out-of-pocket expenses,” he added. “You’ll also get to the point where the risk pool will become so broken, because the healthier and younger people aren’t in it, that the prices will get out of hand.”