As it turns out, Donald Trump administration’s decision to break with Obamacare and give consumers a cheap, short-term health insurance option is bothering state governments and the insurance industry.
While the simple solution to the intricate mess that is our overly regulated health care system is to completely rid the books of all health care rules, the Trump administration decided to give Americans who are healthy and unable to afford any of the Obamacare options the chance to sign up for “short-term” plans.
Precisely because these plans do not have to meet Obamacare standards, insurers are free to offer different options that may not cover as much as the standard plans, making them more affordable by default.
In order to undermine the federal government, states are issuing their own warnings and policies regarding these “junk” plans and how they should not serve as a substitute. But perhaps, what’s more telling about the resistance to the availability of cheap plans is that the insurance industry itself is worried that these “subpar” plans will drive consumers away from the Obamacare market.
As you may or may not remember, Obamacare offered the insurance industry very interesting incentives to be part of the entire project. One is that a certain number of customers was guaranteed to shop for plans within the government-backed “marketplace,” giving insurers a very solid chunk of the market without having to lift a finger.
But now, Trump is allowing companies to introduce options that are short-term, less complicated, and more affordable, so healthy people will eventually drift away from Obamacare plans. That, the industry fears, would destabilize their “safety net” and create uncertainty that the deal they closed with the Barack Obama administration will no longer apply.
But instead of being honest about why Trump’s new policy would not benefit the insurance industry, its top leaders are simply warning Americans that short-term plans are not good enough.
“We are concerned that this proposed rule will lead to more people being uninsured and under-insured, and to higher costs in the long run,” America’s Health Insurance Plans (AHIP) chief executive Matt Eyles said. “Short-term plans can provide an important temporary bridge for Americans who are transitioning between plans. But they are not a replacement for comprehensive coverage.”
AHIP is a major lobbying arm for the health insurance industry, serving as a trade organization representing 1,300 member companies that sell health insurance coverage. Its chief executive wouldn’t dare to openly discuss how much the industry loses by not forcing Americans to purchase their insurance from the group of companies that agreed to participate in the Obamacare marketplace. And he wouldn’t dare to go even deeper into how much the Trump administration already disrupted the industry just by dismantling the individual mandate and freezing complementary payments insurers was promised in case there were not enough Americans purchased their plans. So instead, he just uses Obamacare’s good old fearmongering tactics.
States And Obamacare’s Mythical Rhetoric
Obama promised the world to Americans of all walks of life when defending his plan. Once it came down to implementing it in the real world, however, we learned promises didn’t translate too well.
Even insurers quickly realized they had signed up to a system destined to fail.
Still, the feel-good rhetoric used to sell Obamacare never left the air, and states, even those that suffered greatly because of the system, are afraid of completely walking away from it. What will people say, that they hate the poor and the sickly?
The genius behind Obamacare is that it was a flop, and yet, people everywhere still fight for it, almost as a religious obligation.
While Trump’s approach to health care policy isn’t even close to good enough, as only a completely free market would be able to meet the needs of all individuals, it’s almost uncanny how difficult it is to demystify Obamacare. Regardless of how many ways it fails, people seem unable to turn their back on it.
The fact states are so reluctant to create competition in the insurance market is proof of that.