The Pendulum Swings From One Extreme To The Other

August 2023:

Frank, your short term major medical policy will not be an option for you in 2024.  We will need to look at a regular health policy.

           What are those damn insurance companies doing now?

 It isn’t the insurance companies.  They love short term policies.  The applications still ask health questions and the policies don’t cover preexisting conditions. 

            So the Republicans are screwing me?  Is this Kevin McCarthy or MTG?

 No Frank, This is President Biden reversing the excesses of the previous administration. 

            CRAP!

 The pendulum swings from one extreme to the other.  The only guarantee is that we will be smacked on the backside every time the bob passes through the middle.  Our two political parties expend a lot of energy in search of the extremes and each election, be it Congressional or Presidential, impacts health insurance, the way most Americans access and pay for health care.  

New rules from the Biden Administration.

 In the relative quiet of the last two years you would be forgiven if you had forgotten that we are still operating under the Patient Protection and Affordable Care Act (Obamacare) passed in 2010.  We no longer live under the daily threat of our health care system being dismantled without a plan or a care of what would happen to the 50+ MILLION Americans suffering from serious preexisting conditions.  But each administration, Obama, Trump, and now Biden, has had a significant impact on the way the rules are interpreted and administered. 

This blog documented the various ways that the Trump administration attempted to both repeal the law and when that failed, sabotage the basic framework of the PPACA.  The following are some of the rules and regulations President Trump and his team used to destabilize the markets: 

1.      Eliminate the penalties associated with the Individual Mandate

2.      Defunded the Cost Share Reduction

3.      The promotion of short term major medical policies and association plans

4.      Reducing the Open Enrollment Period

5.      Supporting the Texas Lawsuit

And this is just a partial list!

 The pendulum swung hard to the right.  As noted in the July 2017 post Begging The Arsonist To Put Out The Fire:

 A key element of the Patient Protection and Affordable Care Act (Obamacare) is the Individual Mandate, the requirement to purchase insurance.  This blog and numerous other published articles have noted that the Individual Mandate traces its roots to the conservative Heritage Foundation over twenty-five years ago.  The logic is simple – If we are going to offer health insurance to all Americans and cover preexisting conditions, we must have everyone participate. 

A concerted effort was made to incentivize the young and healthy to leave the insurance pool.  This was done by removing the penalty for not having comprehensive coverage and by promoting short term major medical plans.  In early 2018 Health and Human Services Secretary Alex Azar changed the definition of short term major medical coverage and allowed these plans to be sold for up to an entire year. These plans were initially designed to bridge the gap between group health plans or, pre-Obamacare, to help those who didn’t qualify for comprehensive coverage.  It is important to note that short term plans:

·         Ask underwriting questions pertaining to health, occupation, and hobbies

·         Are for a limited number of days

·         DO NOT COVER PREEXISTING CONDITIONS

·         Have a limited maximum benefit

 Under the previous administration, the healthiest amongst us were encouraged to enroll in a short term plan until they got sick, injured, or pregnant.  They could then migrate to Obamacare at the Annual Open Enrollment, assuming that they didn’t need comprehensive coverage first.  What could go wrong?

 The pendulum swung through the middle last year on the way to the left.  In the last two years we have seen a Special Enrollment Period that allowed millions of Americans to reassess their plan choices, an expansion of the Tax Credit Subsidy, and the Annual Open Enrollment Period expanded to January 15^th.  The Biden administration is now ready to tackle short term and fixed indemnity policies.

 The Biden administration proposal would limit short term major medical plans to three months and allow only a one month extension.  Though we haven’t seen the details, it is assumed that short terms will no longer offer office visit copays and some of the other benefits that made them look like regular, comprehensive health care plans.  President Biden has cited instances where individuals purchased short term plans and were shocked to learn that their claims weren’t paid.  Short term policies do have a place in the market.  They do a good job of paying for things that are new, big, and different.  There are people who could not or would not pay for full, comprehensive health insurance.  It is a gamble.  It appears that the casino has been closed.    

I’m not looking forward to my call to Frank next month when these rules are finalized.   I expect anger, cursing, and at least one threat to move to Canada.  Frank is politically aware.  He knew that this day would come.  It was as inevitable as a pendulum swinging back the other way.  Me?  I’m just glad that he never had to test the limits of his short term coverage and I’ll remind him that all good(?) things must come to an end. 

Dave 

www.cunixinsurance.com

 Picture – This is where a Foucault Pendulum hung in the Cleveland Museum of Natural History until it was removed during the current construction.  Proof that all good things do, in fact, come to an end.