A week or so ago, friend and HuffPost reporter Jonathan Cohn emailed me:
Consumers frequently don’t understand what they’re buying [when it comes to short‐term, limited duration insurance (STLDI)], or how STLDI might be different from an ACA‐compliant plan. In part, because companies selling STLDI aren’t always clear on what the plans do/don’t cover. [In other words], there’s an inherently high risk for confusion—and opportunity for exploitation/fraud—in the way the market exists now. What do you think about this argument?
Cohn ultimately turned that topic into this article.
It contains a number of inaccuracies and misleading characterizations.
Cohn laments gaps in STLDI plans without noting that government regulation was responsible for many of those gaps. When Jeanne Balvin lost her STLDI plan in the middle of an episode of diverticulitis, leaving her with $97,000 in unpaid medical bills, it was because the Obama administration required her carrier to drop her after just three months.
Cohn fails to note similar gaps in ObamaCare plans. When Obama threw Balvin out of her STLDI plan, ObamaCare denied her coverage until the following January. Indeed, for 10 months out of the year, STLDI plans have fewer gaps than ObamaCare plans because, with few exceptions, ObamaCare denies coverage to everybody outside of a narrow window in November and December. I guess ObamaCare’s coverage gaps don’t matter?
Cohn portrays rules that President Trump put in place in 2018 as widening such gaps. In fact, Trump’s rules increased consumer protections in STLDI plans by filling in the gaps that Obama had created. Trump’s rules would not have required Balvin’s insurer to drop her.
Cohn inaccurately casts the new STLDI rules that President Biden just proposed as an effort to “intervene in markets, in order to protect people from risk and guarantee a level of economic security.” In fact, Biden’s proposed rule deliberately exposes sick people to greater risk by stripping them of their health insurance after just four months and leaving them with no health insurance for up to 12 months, much as Obama did. Biden’s rules would make health insurance less universal. Congressional Budget Office estimates suggest they would leave some 500,000 consumers who would otherwise have health insurance with no coverage at all.
Cohn writes that while ObamaCare imposed new regulations on most forms of health insurance, “The Affordable Care Act…made an exception for ‘short term/limited duration’ plans…But it allowed the federal government to regulate these plans.” Nothing in that quote is true. Congress exempted STLDI from nearly all federal health insurance regulations not in 2010 when it passed the ACA but back in 1996 when it passed the Health Insurance Portability and Accountability Act (HIPAA). ObamaCare didn’t create the exemption for STLDI, touch that exemption, or give regulators any more authority over those plans than HIPAA already did. If anything, ObamaCare signaled that Congress wanted to protect patients from coverage cancellations, not mandate coverage cancellations, as Obama did and Biden seeks to do. ObamaCare’s silence on the STLDI exemption suggests Congress had no problem with the rules at the time, which allowed such plans to last 12 months.
You get the idea.
The main reason I’m here today, though, is to give a fuller response to the question of whether STLDI plans mislead consumers. Cohn quotes me in his article. (Thanks, friend!) But he used only part of my response to his question. Here’s my full response, which I have lightly edited for public consumption.
Barack Obama misled more people about ObamaCare plans than insurers will ever mislead people about short‐term plans. ObamaCare plans are themselves notorious for misleading consumers via inaccurate provider directories. So are Medicare Advantage plans. Medicare’s trust funds are an institutionalized, ritualized lie. Do any of the people who want to eliminate short‐term plans propose eliminating those plans?
It’s a complete[ly disingenuous] argument. Health insurance is complex. Few consumers will ever have full information. Every health insurance plan will have enrollees who didn’t understand what they were getting.
When there is an information problem, you don’t ban the product. You fix the information problem. Many car dealers are shady. Do we ban cars? No. We don’t even ban used cars. We deal with the information problem.
The 2018 Trump rule mandates that short‐term plans disclose that they are not ObamaCare plans. I imagine this mandate ironically makes short‐term plans more attractive to consumers as often as it makes them less attractive.
I italicized the two sentences Cohn selected for his article. As you can see, those two sentences don’t really capture my broader point that complaints about STLDI plans misleading consumers are disingenuous. In any case, such deception in no way justifies throwing patients out of their STLDI plans after four months.
Worse, those two sentences in isolation could give the impression that I don’t care about the costs of people misleading consumers about their health plans. I would go so far as to say I care a lot more than STLDI opponents do because I also care when Medicare or Medicaid or Medicare Advantage plans or ObamaCare plans or Medicare’s trustees or Congress or Obama, Trump, or Biden do it.
The irony of Cohn’s article is that, while purporting to explore the important issue of shadowy figures misleading consumers about health insurance, he ignores the biggest example of that problem in this whole fracas.
@michaelfcannon A new proposal from President #Biden would *mandate* the very practice of canceling #HealthInsurance for the sick that Biden promised #Obamacare would end. More: https://thehill.com/opinion/healthcare/4087396-bidens-new-plan-threatens-health-coverage-for-more-than-half-a-million-people/ #CatoHealth @C@Cato Institute ♬ original sound — Michael F. Cannon
Biden’s STLDI proposal breaks that promise. Turns out what Biden meant was, “If you have private health insurance, you can keep it–but only for four months.”
Biden misled millions of health insurance purchasers. More than any STLDI insurer ever will. But HuffPost readers would never know.