States can provide Obamacare relief without repeal
November 19, 2021
The Affordable Care Act shifted power from state insurance commissioners and consumers to the federal government. This has resulted in less affordable care. After falsely promising people they could keep their health plans, President Barack Obama responded to the ensuing political backlash by letting people renew their "grandmothered" plans bought after the ACA was signed but before exchanges opened. Democrats responded to higher premiums by increasing subsidies and removing the upper-income limit, shifting costs to taxpayers.
Still, states can enact laws to provide alternative health benefit coverage. Legislators can provide relief from Obamacare’s onerous regulations without a federal repeal or court case. While Democrats pointed to these mandates as generous, many complained about having to pay higher premiums for coverage they did not want. Young men and older women criticized higher premiums for maternity benefits they did not need, for example.
Premiums more than doubled in the individual health insurance market between 2013 and 2017, and increased another 27% in 2018, before moderating. The increases affected those who did not have access to health insurance through employers or qualify for government subsidies. Over 60% of participants in the individual market are either self-employed or own or work for a small business, making them even more vulnerable to premium increases. Individuals were forced to buy government approved plans by the individual mandate, and businesses with 50 or more employees were forced to offer coverage by the employer mandate.
Congress eliminated the penalty tied to the individual mandate effective in 2019, creating demand for flexible healthcare coverage. President Donald Trump increased supply by making options for alternative health benefit coverage more widely available through association health plans and short-term limited duration plans. The rules are in litigation . Association health plans have been around for decades; they let the self-employed and small businesses pool their purchasing power, for example through trade associations and chambers of commerce, and avoid the ACA’s expensive rating and benefit mandates.
Kansas, Indiana, Iowa, Nebraska, South Dakota, and Texas have recently enacted laws to allow farm bureaus to offer health plans, while Georgia and Ohio farm bureaus offer self-funded plans. The farm bureaus are trusted entities, with decades of service, and the expanded offerings do not prevent those with pre-existing conditions from accessing exchanges. Many farm bureaus contract with experienced companies to manage their plans and have varying membership requirements. Farm bureau plans include high deductible and short-term options, health screens, waiting periods for certain conditions, guaranteed renewability, and portability. They let consumers trade lower premiums for varying cost-sharing or benefit structures. Individuals have different healthcare needs, and flexible plans give them the power to choose appropriate coverage.
California enacted legislation restricting who can access or offer association health plans. Texas enacted legislation allowing the Texas Mutual Insurance Company to offer health benefit coverage exempt from insurance regulations. For nearly thirty years, the Tennessee Farm Bureau has offered coverage plans with lower premiums and high retention rates.
Trump expanded access to limited duration plans, extending their duration from three to twelve months and allowing them to be renewed for up to three years. These plans are exempt from the ACA’s costly mandates. About half the states have laws prohibiting or restricting the sale of these plans. Employers can also offer tax-free Health Reimbursement Accounts to help employees pay medical costs and individual market premiums.
Top line: while Republicans in Washington can’t currently repeal Obamacare, legislators can give their residents relief from the law’s high costs. They can expand access to farm bureau plans and other alternative health benefits. Liberals insist federal micromanagement is the only way to protect consumers, but conservatives can show well-informed consumers, aided by state regulators, can be trusted to make their own choices and will benefit from competition.
Alternative health benefits are not for everyone; many individuals with subsidized employer-provided, exchange, or Medicaid coverage are shielded from high premiums. However, alternative health benefits can provide lower cost, tailored coverage options that meet the needs of many not currently well served by Obamacare’s high-cost, one-size-fits-all mandates.
Bobby Jindal serves as Chair, Center for a Healthy America for the America First Policy Institute (AFPI).