Illinois recently joined 15 other states and the District of Columbia in banning “short-term limited duration insurance” (STLDI), and the Biden administration capped future plans at four months. As evidenced by increasingly restrictive laws governing the policies, frequent use of the term “junk” to describe them, and newly mandated warnings required on the plans, some policymakers clearly want to steer consumers away from them.
Should voters welcome these new restrictions? Do your legislators simply care too much about you to let you hurt yourself this way, or are other factors at play?
What is STLDI?
As the name implies, STLDI is health coverage with a fixed duration. People often use it when waiting for their next plan to begin, such as between jobs. STLI is generally far less expensive than the Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage available when employment ends. Individual COBRA premiums average $717 per month, whereas STLI premiums average $171. STLI coverage is usually limited, but some people—particularly those in good health—primarily want lower premiums.
Until recently, people who liked STLI coverage and wished to keep it could sign up for a term of up to three years, and some companies allowed clients to renew the policy. Many people did exactly that, because STLDI provides exemptions from some rules governing policies meeting the criteria of the Affordable Care Act (ACA), also known as Obamacare. It can eliminate underwriting concerns for people with pre-existing conditions, and it covers catastrophic illness and injury while allowing low out-of-pocket premiums.
Until the government insisted their constituents needed to be protected from the health plans they obviously wanted, STLDI made it possible for those who were promised they could keep their doctors and their insurance policy (a promise voted Lie of the Year in 2013 by Politifact) to actually do it.
Why, then, would anyone work so diligently to eliminate STLDI?
Obamacare Alternatives Under Fire
Despite the rosy picture creators painted at its inception in 2010, numerous people discovered the ACA fell far short of its promises. Even supporters admitted it did not accomplish its stated goals. But creators of any tax-funded benefit program have good reason to dig in their heels: they want to be re-elected.
Admitting fault naturally leaves legislators vulnerable to criticism and can hurt political careers. Failure to concede on Obamacare could be partially attributed to this. However, a deeper strategy underlies government measures of this type.
Once voters are hooked on “free” automated benefits, they are understandably reluctant to relinquish them. The mere suggestion of eliminating this tax-funded program now elicits shock, outrage, and accusations of heartlessness. Today, 14 years after Obama introduced it, many people seeking health insurance have never known anything else. The population can no longer imagine an alternative. Alternatives seem at best like burdens and at worst like insurmountable obstacles.
Behind The Scenes
Withdrawal pains are compounded by the fact much of the damage occurs unnoticed. People feel the absence of an immediate benefit much more keenly than they feel costs and taxes gradually creeping upward.
Public perception of the ACA has improved, but overall healthcare costs have risen to a staggering extent, reaching $4.5 trillion in 2022. A revealing Cato forum cited numerous other statistics illustrating the dire situation behind the curtain. Many low-premium, low-maximum, low-deductible plans of pre-ACA days have disappeared. The ACA itself states any health insurance cost over 9.1% of income is unaffordable, yet some people face many times that under the ACA. Subsidies for it now extend to people making $600,000 per year. By its own standards, Obamacare is unaffordable.
Insurance companies with high-paid lawyers and lobbyists have gotten around the ACA’s pre-existing condition requirements. President Biden’s recent rule exposes people to an extended lack of insurance coverage. And yet, the ACA has overwhelmingly become an accepted part of life.
The Bottom Line
Ultimately, the purported logic behind stripping people of financial healthcare options is irrelevant. It’s morally wrong, and that alone should halt the conversation. But it’s also inefficient and ineffective for the very people the law supposedly aids, and the damage just grows over time.
This latest state overreach presents yet another example of legislators banning free-market, workable solutions in favor of smoke and mirrors. Voters all over the country should be decrying the latest federal bill, voters in the 15 most restrictive states should demand their lawmakers return their rights, and voters in the 35 remaining states should refuse to support anyone intent on stealing any more of their money and freedom.