I&I Editorial

When President Trump announced plans to provide beleaguered health insurance consumers a cheaper alternative to Obamacare, critics decried it as “sabotage.” It would, they said, destabilize Obamacare exchanges and drive up premiums, while ripping consumers off.

It turns out that, like everything else about Obamacare, these predictions were dead wrong.

Until Obamacare started up in 2014, short-term insurance plans were a niche market that mainly served those between jobs. As the name suggests, these plans were meant to be held only for short periods, and there were limits on whether or how you could renew them.

This market exploded after Obamacare went into effect, and suddenly millions of people found their premiums shoot up. From 2012 to 2017 — years when premiums doubled under Obamacare — enrollment in short-term plans climbed more than 120%. Short-term plans are far cheaper because they don’t have to include all Obamacare’s mandated benefits, and they can set their premiums based on risk.

So, the Obama administration did what Democrats always do. They tried to take this choice away from people. In late 2016, the administration limited short-term plans from 12 months to just three months.

Soon after Trump took office, he instructed the Department of Health and Human Services to look for ways to increase affordability and choice for families trying to buy insurance on their own. An easy first step was to overturn the Obama three-month rule.

Last year, the Trump rule went into effect, which not only allowed plans to last 364 days, it lets people renew them for up to 36 months.

“Sabotage!” the health care experts cried. This new rule would allow junk insurance that would rip consumers off! And it would siphon off all the young and healthy people out of the Obamacare exchanges!! And that would force Obamacare premiums to go through the roof!!!

These experts warned states that if they didn’t step in to impose their own restrictions on short-term insurance in order to “protect consumers,” then “premium costs for ACA-compliant coverage are likely to rise.”

Nine states — California, Hawaii, Illinois, Maryland, Vermont, Colorado, Delaware, New Mexico, and Washington — and D.C. listened to these experts and imposed their own restrictions — of varying severity — on short-term plans. (California banned them outright.)

Twenty-five states kept pre-existing rules in effect that were of varying degrees stricter than the Trump rule.

As a result, only 16 states let the Trump rule go into effect.

So now that insurance company rate requests for Obamacare plans are coming in, we can get a sense of how accurate those “sabotage” predictions were.

Based on the data currently available, the average proposed rate hike in the nine “protect consumer” states plus D.C. is 2.9%.

Not bad.

Except that the average rate request for the “sabotage” states is a decrease of 0.5%.

The biggest proposed rate hike in the “sabotage” states is Kentucky at 5%. Six “sabotage” states show rate cuts.

On the other hand, among the 10 “protect consumers” states, two face rate hikes of 13%, one 9%, and only three are showing rate cuts. (This doesn’t count Colorado, which is reporting an 18% rate cut thanks entirely to a huge new state subsidy.)

Here’s another way to look at it. In 10 states, there are no short-term insurance options available at all, either because the states banned them outright or regulated them out of existence. Of those, eight have reported rate requests. The average rate hike is 5.6%.

Now, admittedly, these are preliminary rate requests that are subject to review by the respective state governments. Not every state has reported its Obamacare rates. And the averages don’t take into account differences in population size between states.

But the results so far strongly suggest that the “experts” had it exactly wrong when they predicted doom and gloom by giving consumers a way out of Obamacare.

States that opened their markets up to new choices and more competition are seeing smaller rate hikes than those that decided to “protect” their consumers by forcing them into government-mandated Obamacare plans.

Whod’a thunk it?

— Written by John Merline

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