About That “Junk” Insurance

On Wednesday, the Trump administration released its final rule regarding short-term, limited-duration insurance coverage. For all critics’ carping about how short-term coverage epitomizes “junk insurance,” these plans will provide another option for individuals who find Obamacare-compliant policies unattractive and unaffordable.

Pros and Cons of the Rule

The Cato Institute’s Michael Cannon lists a good summary of the rule’s benefits. At a time when the market for unsubsidized coverage away from the exchanges has dropped by nearly 40 percent, short-term plans will allow individuals who find Obamacare-compliant coverage unaffordable to purchase coverage.

Whereas the Obama administration defined “consumer protections” as “protecting people from being a consumer” of anything other than exchange plans, the Trump administration’s rule allows consumers to buy coverage that actually protects them from future harmful health events.

That said, the rule brings with it two notable drawbacks. First, the administration believes it could raise federal spending by $28.2 billion over a decade. The estimate comes because some healthy people likely will leave the exchanges to buy more affordable short-term coverage, raising premiums—and thus premium subsidies—for those who remain in Obamacare-compliant plans. While the Congressional Budget Office estimated a much smaller (and slightly positive) fiscal impact, the rule could end up increasing spending at a time when the federal government has racked up $21 trillion in debt (and counting).

Second, the rule doesn’t repeal Obamacare—an obvious statement, but one with important implications. Another president can easily revoke the Trump administration’s actions, and the next Democrat will almost certainly do just that. While helpful, the rule itself should not serve as an excuse for Congress not to take action to repeal Obamacare’s harmful regulations—because if you like your short-term plan, and Congress does nothing, you probably won’t be able to keep it.

What’s the Real ‘Junk Insurance’?

But as I wrote last week, Kofman has refused to buy an Obamacare plan, because she claims she requires an employer subsidy—this despite making more than $217,000 per year. Given her sizable income, Kofman must not think exchange policies unaffordable, even without an employer subsidy.

After all, the Exchange Authority recently endorsed, and the District enacted, a mandate requiring people with far less income than her—that is, people like me—to buy unsubsidized coverage or pay a tax. Why does she not buy the insurance policies she sells—because she considers them “junk insurance?”

She’s not alone. At a briefing last month, Sara Collins, a vice president at the Commonwealth Fund, asked whether short-term plans and other non-Obamacare policies would have “warning labels on them.” Collins neglected to provide a warning of her own: She has not purchased an exchange plan. Lest one think she cannot afford to do so, Commonwealth’s tax filings reveal that for the 12 months ending in June 2017, Collins received $334,353 in total compensation (including benefits).

I consider the very definition of “junk insurance” a policy that one encourages others to buy but refuses to purchase. On that, Corlette has a sterling track record. At a 2016 briefing, her presentation included a bullet point about the need to increase exchange sign-ups. She went further in her oral remarks: “I think it’s critical to do everything we can do boost enrollment.”

But when I asked Corlette at that same 2016 briefing if she had taken her own advice and bought an exchange plan, I received a song-and-dance about her life as a “spoiled academic.” Lest anyone think her unfeeling, however, she allowed that “I do try to think about” individuals without employer-sponsored coverage when designing insurance coverage standards.

Principles Versus Power

That’s the point. If Obamacare advocates thought achieving the law’s goals was so critical, they would have put their money where their mouths are and enrolled in exchange plans long ago. For all liberals’ talk of solidarity and “We’re all in this together,” the unwillingness for individuals making hundreds of thousands per year to enroll in exchange coverage, even though they could easily afford to do so, astounds. Given their own failures to enroll, who are they to criticize President Trump for “sabotaging” the law?

In their quiet moments, people like Kofman, Collins, and Corlette may wonder what strange confluence of events led the American people to elect Donald Trump, and empower him with the authority to dismantle their liberal paradise. But their failure to practice what they preach yields a ready answer: They need only look in the mirror.

This post was originally published at The Federalist.

Why Obamacare Supporters Won’t Enroll in Obamacare

Today, the beginning of Obamacare’s fourth open enrollment period, will see Obama administration officials and liberal advocates engaging in the usual publicity blitz. They’ll tell Americans how much money they can save, how affordable plans are—don’t believe the hype about premium increases, they claim—and the benefits of having health coverage.

All of this can be rebutted by one simple rejoinder: If these exchange plans are so good, why haven’t you purchased one?

It’s a question I’ve asked several Obamacare advocates, because, while they talk about Obamacare, I actually have to live it. Because Washington DC abolished its private insurance market, I as a small business owner have to buy a plan on the federal exchange. For 2017, new plan requirements by the DC exchange—insurers now have to offer eight “standardized” plans—coupled with the difficult business environment meant that my insurer, CareFirst Blue Cross, cancelled its health savings account plan.

As a result, I and 6,980 other HSA plan participants received cancellation notices in September. As you can see from the notice, the “substitute” plan I was offered has a premium of $296.40—that’s a 20.2 percent increase, for those of you keeping score at home—and a 25 percent increase in my deductible, from $1,600 to $2,000.


The day before I received official confirmation of my plan’s cancellation, I attended a briefing on insurance exchanges. I pointed out that, to most people in Washington DC, Obamacare was an abstract idea. Policy-makers at think-tanks, lobbying firms, or in government have high-paying jobs that come with employer-based health coverage, so they really don’t have to worry about whether the exchanges succeed or fail.

I asked the panelists point-blank: You’re speaking about the state of Obamacare’s exchanges, but do you yourself receive coverage through them?

As I had suspected, most admitted they do not. Sabrina Corlette, a Georgetown University researcher, replied that she was a “spoiled academic” who received coverage through her employer. Ironically enough, Corlette’s presentation for the briefing included a slide noting that the exchanges needed to “boost enrollment.” But when asked whether she would enroll in an exchange plan—thereby boosting enrollment—she said she would not. This brings to mind St. Augustine’s famous phrase, “Grant me chastity and continence—but not yet.”

Elites Won’t Join Obamacare’s Ghettoes

One reason why Corlette, and other “spoiled academics” like her, won’t give up their existing coverage is simple: Compared to employer-based insurance, exchange plans—and this is a technical term—suck.

Thanks to Obamacare’s ability to make insurance competition disappear, nearly one in five Americans (19 percent) will have the “choice” of only one insurer on their exchange in 2017. Obamacare’s benefit mandates have forced insurers to narrow networksthree-quarters of all 2017 exchange offerings include no out-of-network coverage—and raise deductibles so high as to render insurance “all but useless” for many.

As I have previously written, Obamacare’s insurance marketplaces could be more accurately described as ghettoes, not exchanges. The median income among all healthcare.gov enrollees is 165 percent of the poverty level, or about $40,000 for a family of four, so enrollees are predominantly low-income, besides sicker than those on the average employer plan. The combination of narrow networks and tightly managed care has zero appeal to the average person with an employer plan—which explains why the liberal elites promoting Obamacare won’t actually enroll themselves.

‘I Do Try to Think about Them’

At the September briefing, Corlette claimed Obamacare was an attempt to “lift the standards for individual market products” to make them more like employer plans—just not enough for her to enroll. (As someone actually on the exchanges, I can attest to a lot of “lift” for my premiums and deductibles; standards and network access, perhaps not as much.)

If one wants to explain the reasons for the rise of Donald Trump, one could start with a group of elites who think they can determine what others want, even while deliberately segregating themselves from the effects of the policies they created.As the saying goes, actions speak louder than words. If advocates of Obamacare actually believed the law was providing insurance comparable to employer plans, they would switch to exchange coverage. That they are not speaks to the law’s fundamental problem: Liberal elites can sell the benefits of Obamacare all they want, but when it comes time to put one’s money where one’s mouth is, the American people aren’t buying—and neither are the liberals.

This post was originally published in The Federalist.

More on Mandates and Lawsuits

In light of yesterday’s arguments at the Fourth Circuit Court of Appeals, it’s worth pointing out a few key issues.  First, as yesterday morning’s CongressDaily noted, the federal government appears to have changed its argument when it comes to defending the individual mandate.  Rather than attempting to say that Congress can regulate the “inactivity” of purchasing health insurance, the Solicitor General is now arguing that the individual mandate is regulating the decision to purchase health care.  As Georgetown University law professor Randy Barnett noted in the article, the change in strategy suggests the Administration “decided the earlier argument wasn’t working so well.”

Second, HHS’ Office of Planning and Evaluation released a report yesterday discussing the lack of ability by the currently uninsured to pay hospital bills – a report that the Administration will doubtless use to justify the individual mandate on the basis of uncompensated care costs incurred by hospitals.  There’s just one problem with that strategy however:  The head of HHS’ Office of Planning and Evaluation previously published an article in April 2008 in which she stated that “the magnitude [of uncompensated care] is quite small,” and that the “most important benefit of mandates is symbolic.”  It’s worth noting the cognitive dissonance of an HHS office that released a report undermining assertions made by its head just three short years ago.  Just as important, as has previously been noted, some may question why the Administration is imposing this unprecedented mandate on Americans in order to have a “symbolic” effect on solving a “quite small” uncompensated care problem.

Finally, the Yale Law Journal recently published an article supporting the individual mandate.  The article calls constitutional objections to the mandate “silly,” and then proceeds with this modest assertion: “There may be no need for judicially imposed limits on Congressional power.”  So not only is the idea of a constitutional objection to government forcing individuals to buy a product “silly,” apparently the entire notion of limited government is as well.

Follow-Up from Virginia Health Care Ruling

As might be expected, there are numerous articles this morning following up on Judge Hudson’s ruling in the Virginia case against the health care law.  Secretaries Holder and Sebelius have an op-ed in the Washington Post arguing that “striking down the individual responsibility provision means slamming the door on millions of Americans like Gail O’Brien, who’ve been locked out of our health insurance markets” – emotional arguments which some may view as tangential (at best) to the core legal issue of whether the Constitution permits the federal government to force every American to buy a particular product.  Other interesting points of note from this morning’s stories:

  • The Brookings Institution’s Henry Aaron told a Bloomberg reporter that striking down the mandate would lead to MORE federal spending: “The only way this works is if they offer an adequate subsidy and it’s debatable whether the law currently does that.”  Some would question the premise that the “solution” to striking down a law due to Congressional overreach is yet more government spending.
  • In the same Bloomberg piece, the liberal Aaron admitted that the law’s constitutionality is “well short of a certainty,” demonstrating that even the left is being forced to consider constitutional questions that Speaker Pelosi herself didn’t think serious earlier this year.
  • Georgetown law professor Randy Barnett was quoted in the New York Times: “All the insiders thought [the law’s constitutionality] was a slam dunk…Maybe a slam dunk like weapons of mass destruction were a slam dunk.”
  • Speaking to Politico, George Washington University law professor Jonathan Turley called Monday’s ruling “very thoughtful—not a screed…I don’t see any evidence this is motivated by Judge Hudson’s personal beliefs….Anybody who’s dismissing this opinion as a political screed has obviously not read the opinion.”

There were additional stories from the Wall Street Journal and the Washington Post.  In addition to its legal analysis above, the New York Times had several pieces – a general overview, a story on how the ruling will affect implementation, and an editorial that (shockingly) supports the law. But perhaps most interesting of all is the Times’ piece on the political impact, which notes that “from a political standpoint, the only case [against the health care law that really matters is the one Mr. Obama lost on Monday,” and argues that “the ruling puts Mr. Obama on the defensive over health care at a time when he would rather be talking about the economy” and that the President “has been unable to bring the public to his side” on the issue.  (On a related note, yesterday’s ABC News poll found that 52 percent disapprove of the health care law, while only 43 percent support it, the largest gap in support “since the latest debate over health care reform began in earnest in summer 2009.”)