Short-term health plans are the right path for Trump to improve the marketplace

Finally, we have good news on health care reform coming out of the nation’s capital.

In October 2017, President Trump issued an executive order calling for more consumer choices in the health insurance market. The departments of Health and Human Services, Labor and the Treasury responded by taking aim at an Obama administration policy that severely limits the flexibility of a coverage option called “short-term, limited-duration insurance plans.”

People have had the choice of using these plans for over 20 years, but the Obama administration reduced the duration of such plans from 12 months to only three. Letting the marketplace offer 12-month terms will certainly provide options for the millions of people who are currently herded into unaffordable plans on the exchanges. But the administration also should use this occasion to look at other changes to these plans, which could give consumers greater clarity and confidence as they seek relief from high prices.

Last week marked the end of the public’s time to comment on the proposed regulatory changes, and the three agencies should now make good on Trump’s earlier directive to expand coverage opportunities and decrease costs. Not surprisingly, a number of pillars of the national health-care lobby, including the Academy of Family Physicians, oppose the change. They assert that it would cause healthier individuals to consider dropping the costly ObamaCare plans in favor of the more affordable short-term option, leaving those remining in the exchanges more vulnerable to rising costs. One reason these plans are cheaper is that they can waive mandates on providing essential health benefits and guaranteed-issue to those with pre-existing conditions, ultimately allowing insurers to pass along those cost savings to consumers.

The special interests that oppose the change ignore two important facts. The first is that enrollment on the ObamaCare exchanges has been on the decline or at best stagnant for years now, thanks to rapidly increasing price tags. The second inconvenient truth is that short-term health plans were popular during the pre-Obama era for their flexibility and affordability, two highly desirable attributes missing from today’s insurance marketplace.

Just consider that 40 percent of the individual market does not qualify for subsidies on the exchanges. This means that double-digit spikes to premium costs are unmitigated and causing many individuals to risk going without health insurance all together. The rate of the uninsured — the very population that ObamaCare promised to reduce — is now beginning to trend back up.

Short of repealing and replacing the Affordable Care Act, the federal government must begin expanding access to alternative options that won’t price millions of individuals out of coverage. The proposed rule change that would return short-term plans to encompass longer periods of time is a step in the right direction, but the Trump administration should make the reform more powerful by also making these plans renewable.

As public comments came to a close on departments’ proposed change in policy, 39 different free-market health care economists and policy analysts comprising the Health Policy Consensus Group issued public letter to the Centers for Medicare and Medicaid Services. They argued that the Obama administration’s restrictions on these plans violates a law that reserves such regulation to the states.

Additionally, the group called for the Trump administration to make good on its intention to broaden the terms of the plans to 12 months, while also allowing insurers to make the plans renewable. “We explain the policies are needed ‘for a variety of reasons,” explained Grace-Marie Turner, president of the Galen Institute, who helped organize the letter. Those reasons, she continued, include “a gap in coverage that lasts longer than anticipated or simply a desire to obtain and retain coverage [people] can afford, rather than become uninsured.”

A large swath of consumers has been priced out of health insurance by ObamaCare, and giving them more versatility through allowing the option of lower-cost coverage is long overdue. With Congress largely gridlocked, the Trump administration’s efforts to generate some relief legislatively have proven elusive. By pursuing the limited regulatory reforms at his disposal, Trump can at least make a dent in his broader campaign agenda of freeing the health-care marketplace from Obama’s failed policies.

Lindsay Boyd Killen is vice president for strategic outreach and communications at the Mackinac Center for Public Policy, and member of the Health Policy Consensus Group.