Perspective by Sen. Dale Kooyenga
The debate over health care costs and access often comes down to consumer freedom. What kinds of health insurance plans will government allow people to purchase?
In Wisconsin, state law dating back to 2009 limits the availability of one important type of coverage, short term health plans. Contrary to less-restrictive federal rules, Wisconsin law limits these plans to 18 months total duration.
That limit reduces health coverage options for students graduating from school but not yet employed full-time and without access to a parent’s insurance, those between jobs for whom COBRA coverage is too costly, and seniors who retire before Medicare eligibility. One estimate found that 58,000 Wisconsinites could benefit from short term coverage.
Short term plans are attractive to some groups of people because they are considerably less expensive than plans offered under the Affordable Care Act (ACA) —up to 90% less costly. That’s because the ACA exempted short term plans from many of the law’s most stringent, one-size-fits-all mandates that drive up the cost of coverage.
Following the passage of the ACA, federal regulators cut short the maximum allowable duration of short term plans in order to steer people into ACA-compliant plans, which are required to offer very broad coverage. Under President Obama, short term plans could be offered for a total of no more than three months. The ACA’s architects needed healthy, lower cost individuals to enroll in ACA-compliant plans in order to balance out the costs of older, less healthy people.
However, as premiums continued to rise, the federal government recognized this approach limited affordable health coverage options. So in 2018 the federal government instituted a new rule which returned short term coverage to a duration of 12 months and permitted renewals for up to 36 months. The rule change was a win for many people in the health care market who needed affordable coverage but couldn’t afford costly ACA-compliant plans and didn’t qualify for federal premium subsidies.
But the Wisconsin law limiting the plans to 18 months is still on the books here in the Badger State. That’s why I am joining Rep. Adam Neylon to author a new bill that simply matches Wisconsin law to the 2018 federal rule. This bill came specifically at the request of constituents in our districts asking for this change.
Critics argue that short term plans undermine the law by allowing people to purchase health insurance plans outside the bounds of the law’s myriad regulations. But those regulations drive up the cost of ACA-compliant plans, putting them out of reach for many people who need affordable temporary coverage.
Rather than recognize that each individual is experiencing unique circumstances, critics accuse short term plans of being “junk plans.” Like the ACA architects tried to do, they seem to believe people should be steered into more expensive one-size-fits-all federal coverage by limiting the availability of alternatives. In essence, they want everyone to buy a Cadillac because they believe Cadillacs are better and everyone should have one, even if they can’t afford it. Some even go as far as arguing that people shouldn’t be allowed to buy anything but a Cadillac.
But free market health care reformers argue that some people don’t want a Cadillac. For whatever reason—budget, personal preference, individual needs—some people would rather buy a Subaru. It’s their choice, and it’s not the place of politicians to limit coverage options based on what we think is best for them.
The real choice for individuals in the market for these plans is often is not between an ACA plan and a short term plan. Their real choice is between a short term plan and going without any coverage at all for a period of time. My bill with Rep. Neylon recognizes this.
Consumers should be able to choose from a wider array of plan options that fit their personal needs and budget with as little meddling by policy makers as possible. Under this bill, people who need affordable coverage to bridge two periods of their lives—school, work, retirement, or anywhere in between—will have expanded options to do just that.
It’s a simple way to allow more access to affordable care by reducing, rather than expanding, the role of politicians and bureaucrats in health care.
Senator Dale Kooyenga (R-Brookfield) represents Wisconsin’s 5th Senate District, covering the Milwaukee suburbs and portions of the City of Milwaukee.