Affordable Healthcare Insurance


In my last post, Short-Term Solutions for ObamaCare, I discussed ways in which the Trump administration was trying to fix ObamaCare. Since complete repeal failed, the White House is looking for ways to make healthcare more affordable for more Americans.

By eliminating the Individual Mandate, Trump has eliminated the coercion of the Obama administration that forced everyone to purchase healthcare insurance or pay a tax penalty. Now he is trying to lower the cost of insurance so more Americans, especially those without subsidies, can purchase it.

Lowering the Cost

Sally Pipes, writing in Forbes, explains why these new insurance plans will be less expensive. First, they don’t have to comply with the “community rating” rule, which prohibits insurers from charging sick enrollees more than they charge healthy ones. ObamaCare changed the normal process of actuarial analysis that insurers use to estimate future expenses.

Imagine if your teenage son has had five motor vehicle accidents in the last two years but his insurance company cannot charge him a higher premium. Normally, he would be refused insurance at all. But that’s not allowed, either.

The second rule, called “guaranteed issue”, mandates that insurers offer coverage to any willing buyers, no matter how sick or costly they may be. In other words, the insurance company could not refuse to insure your teenage son, no matter how bad his driving! In such a predicament, what is an insurance company to do?

The answer is obvious – charge everyone more! By raising the price of insurance for everyone, they avoid discrimination against your son, the teenage driving menace. They spread the cost of his insurance over the whole market so they can comply with the “guaranteed issue” mandate. Of course, all the good drivers pay more than necessary to coverage the cost of their insurance.

This is exactly how ObamaCare has been treating the cost of your insurance. By eliminating “community rating” and “guaranteed issue”, the insurers can once again price healthcare insurance according to actuarial analysis, the real cost.

To illustrate the impact this will have, let’s look at real rates. At the end of 2016, the average monthly cost for an unsubsidized ObamaCare-compliant plan was $393 per month. The average cost of a short-term plan that is priced by actuarial analysis only is $124 per month. That’s 31% of the cost of the ObamaCare-compliant plan. That’s a savings of $3,228 per year!

Now you know why your insurance is so expensive – and why you haven’t gotten a raise from your employer recently. ObamaCare has driven up the cost of insurance for everyone except those getting government subsidies – and this has lowered or stagnated wages for most employees.

Americans figured this out under the Obama administration. The young and healthy refused to purchase insurance, despite the Individual Mandate tax, and this resulted in higher prices for everyone else. Only 11.8 million people enrolled in ObamaCare exchange plans this year – a 3.7 percent decline from 2017 and nearly 1 million fewer enrollees than 2016.

The Trump administration’s proposed rule changes put low-cost options back on the table. If approved, these new plans should be available by this summer or early fall. It is estimated between 100,000 and 200,000 Americans will jump at the chance to abandon their exchange plan for these new short-term plans.