The health insurance system in this country has been screwed up ever since federal lawmakers passed the Health Maintenance Organization (HMO) Act in the 1970s. Passage of that law irreversibly inserted the federal government into how citizens pay for healthcare. More than 45 years later, the administration is now trying to get rid of short-term, limited duration (STLD) health plans.
What if the administration succeeds? Where do subscribers go; how do they get health insurance they cannot afford any other way? The pat answer is to send them to the federal exchanges where they can get conventional health insurance supported by a boatload of subsidies. But that solution doesn’t work for everyone.
There is an alternative in the self-funded health plan, at least for consumers with employers willing to offer them. Las Vegas-based StarMed (starmedbenefits.com) says that self-funding is a lower-cost alternative to traditional health insurance that can save money and offer consumers comparable coverage. But if the option isn’t available and STLD plans get axed, then what? A lot of Americans are likely to find out sooner or later.
More About STLDs
STLDs are legal and compliant health plans that offer basic coverage for a short amount of time. Plans can have terms of as little as a few days and as much as several years. Plan duration is subject to both federal and state regulation.
Many STLDs do not offer all the coverage options you would get with the conventional plan, even when you compare them against federally subsidized exchange plans. But subscribers do get basic coverage for routine care, emergency room visits, and so forth.
The plans are ideal for younger people who are generally in good health. They are also popular among people who want basic coverage for themselves and their families and are willing to trade higher deductibles and copayments for lower monthly premiums.
The Administration’s Proposed Plan
Getting back to the point of this post, the Biden administration plans to begin curtailing STLDs in order to protect consumers from a type of health insurance the president referred to as “a scam”. As politicians often do, Biden has taken it upon himself to determine what is good for the average American and force them to take it whether they like it or not.
Come to think of it, everything the government has done in healthcare since the 1970s has been done with the same justification. Washington knows best. Consumers are incapable of taking care of themselves or making decisions. As a result, we must pay for healthcare services in whatever way politicians and bureaucrats tell us to.
If the administration’s plan comes to fruition, it would do several things. First, it would limit the maximum STLD duration to just a few months, as opposed to the current three years. It would also change the rules so that people who lose their coverage in the middle of a plan year cannot buy a short term plan until the start of the new year. Finally, an estimated half-a-million people would suddenly be uninsured as a result of no longer being able to purchase STLD plans.
Insurers Want More Subscribers
The cynical among us do not believe that STLD plans are inferior or a scam. They are just another option available to people who want basic health insurance. Instead, we are more likely to believe that the administration’s plan is all about satisfying insurance carrier demands for more subscribers. They want those young and healthy people buying traditional health insurance because their premiums help cover older, less healthy people. That is the real scam.