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New Cato Study: “Biden Short‐​Term Health Plans Rule Creates Gaps in Coverage”

Michael F. Cannon

Any day now, the Biden administration could issue a regulation that, if it mirrors what the administration proposed in July, would take comprehensive health insurance away from some 500,000 consumers. Worse, exposing consumers to those risks appears to be the purpose.

Some three million consumers are opting to purchase “short‐​term” health insurance plans instead of ObamaCare plans. The Congressional Budget Office says short‐​term plans offer “comprehensive major medical” insurance with “lower deductibles or wider provider networks” at a cost “as much as 60 percent lower than premiums for the lowest‐​cost [ObamaCare] plan.” All this is possible because Congress exempts short‐​term plans from all federal health insurance regulations, including ObamaCare.

Health Insurance Form

Under current rules, short‐​term plans can cover enrollees for 12 months, which is enough to get them to the next Obamacare enrollment period. The Biden administration proposes requiring insurers to terminate all short‐​term plans after just four months. Enrollees who fall ill would lose their coverage and face up to 12 months without health insurance. The administration acknowledges this would expose consumers to “higher out‐​of‐​pocket expenses and medical debt, reduced access to health care, and potentially worse health outcomes.”

Next, the administration proposes to require short‐​term plans to warn consumers about the risks that the administration would prohibit those plans from covering. The idea appears to be that exposing consumers to completely avoidable risks would spur them to enroll in Obamacare instead.

Today, the Cato Institute released my study, “Biden Short‐​Term Health Plans Rule Creates Gaps in Coverage,” which argues that the administration should abandon its proposal and that Congress should codify current rules for short‐​term plans. I hope you’ll give it a read.

Whatever one’s political leanings, we should all be able to agree that regulators should not make the products they regulate worse.

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