Per the Urban Institute, the proposal will increase the number of Americans insured by 1.7 million while reducing costs to taxpayers.
On February 20, the Trump administration released a proposed rule that would make it much easier for Americans to escape the inflated costs of Obamacare’s health-insurance exchanges. It would repeal an October 2016 regulation with which the departing Obama administration had sought to restrict the availability of “short term, limited duration” (STLD) insurance — a market exempt from the Affordable Care Act’s regulations, on which health insurance could be purchased for around $124 per month, compared with $393 on the exchanges. Obama’s regulation stipulated that these plans could last only three months, while the previous rule had allowed them to last a year and permitted guaranteed renewal of enrollment beyond then.
Congressional Democrats have denounced the Trump administration’s attempt to restore the STLD market to health as an attempt to sabotage the ACA. They have argued that the availability of affordable plans outside of the ACA’s risk pool could deprive the exchanges of essential revenues from healthy enrollees, and thus increase premiums for those who remain.
But when premiums on the exchanges rise, public subsidies automatically expand to guarantee that insurance will be available to enrollees at a limited cost as a share of their income, regardless of their medical risks. There is no need to force unwilling healthy individuals to pay hugely inflated premiums for this to be the case. Punishing them with an individual-mandate tax was unnecessary and unfair, while seeking to prohibit cost-effective alternatives that actually did meet their needs was similarly senseless.
Yesterday’s study from the Urban Institute demonstrates with unprecedented clarity just how small a trade-off would be associated with the substantial gains from the policy.
The report bears a dispassionate title, and the executive summary picks out several statistics related to the combined effects of the mandate and the STLD deregulation. But as was made clear during last year’s legislative attempts to replace the ACA, estimates of the mandate’s impact are so speculative and likely exaggerated that they serve to obscure less ambiguous and more important statistics.