Among the executive orders signed by Governor Tony Evers in his first week was a directive for DHS and DATCP to “provide recommendations on how to…. Protect against attempts to undermine the Affordable Care Act marketplace with short term plans that do not comply with Affordable Care Act requirements.”
While this provision has not drawn a lot of media attention, it could represent a critical move in denying Wisconsinites affordable coverage outside of the mandates of the Affordable Care Act (ACA).
Short-Term Limited Duration (STLD) healthcare plans were originally designed as a stop-gap measure for people who would be lacking insurance for (appropriately enough) a short time—someone who was changing careers or had just graduated from college. Critically, such plans were exempted from many of the mandates of the ACA, including language on preexisting conditions, and the comprehensiveness of required coverage.
Because these plans exist outside of the onerous framework of the ACA, they tend to be much more affordable than plans offered on the exchanges. Indeed, some estimate the cost of the plans to be 90 percent less than those available under the ACA. Proponents of the ACA don’t like these plans because the low cost is attractive to the young, healthy people that the ACA relies on to support the expensive healthcare of older, less healthy individuals.
Under the Obama administration, such plans were limited to three months. But the Trump administration loosened the rules on these plans to provide a cheaper alternative to ACA-compliant insurance coverage. Now, customers can take advantage of this coverage for 12 months, and renew the policies for up to three years.
Wisconsin currently has something of a middle path in place. People can purchase policies that last for one year, and then renew for a second year. But rather than taking advantage of the new federal rules that allow for additional renewals, Evers is looking for ways to limit the availability of this option that is projected to be used by more than 58,000 Wisconsinites in 2019.
One result of placing greater limitations on such plans is that people may be left entirely without coverage options if they get sick while on a STLD. Because enrollment in health plans under the ACA only happens for a short period of time each year, individuals who enroll in short term plans and get sick during that plan may not have coverage options when those plans come to an end. This serves to exacerbate the problem of uninsured that people like Evers purport to be so concerned about.
The second, and perhaps even more critical, problem is that limiting the time frame of these plans removes a viable healthcare option for Wisconsinites who may be struggling to afford insurance coverage. Insurance prices have skyrocketed in recent years, partially thanks to the coverage mandates of the ACA. Wisconsin’s’ average insurance premiums are among the highest in the nation in both urban and rural parts of the state. Many struggle to pay for insurance, even with the subsidies available on the exchanges. And more and more people are dropping insurance altogether. Short term plans represent a viable alternative for a public desperate for affordable options.
Making insurance more affordable should be a bipartisan issue. Rather than being concerned about protecting the viability of the ACA, let’s consider the healthcare needs of Wisconsin’s low- and middle income families, who perhaps don’t want or cannot afford Obamacare plans.
Will Flanders is the Research Director for the Wisconsin Institute for Law & Liberty.