theodore M I R A L D I mpa ... editor, publisher, writer. katherine molé mfa ... art director

Wednesday, December 25, 2013

Let everyone buy catastrophic health insurance


The American people deserve a Christmas gift: permission to buy lower-cost, catastrophic health insurance on the exchanges. Such insurance offers protection for major illnesses but not for routine care.
Under the Affordable Care Act, only people younger than 30 are allowed to buy such insurance. But President Obama has allowed some others to claim a “hardship exemption” from Obamacare and purchase “bare-bones” or “catastrophic” health insurance plans.
Obama gave the hardship exemption in a Dec. 19 ruling issued by Health and Human Services Secretary Kathleen Sebelius. The administration was responding to a group of Democratic senators who were concerned about the effects of Obamacare on Americans’ wallets. Those whose plans were cancelled and who find the purchase of health insurance on the exchange to be too costly qualify for the hardship exemption.
The question is, why not everyone? It is potentially illegal to allow some to buy catastrophic health insurance and not others. Many Americans are getting sticker shock from health insurance prices. The Manhattan Institute has developed an interactive tool that shows the increases in health insurance prices under the exchanges. See it here.
If everyone were allowed to buy catastrophic health insurance, this would hurt the insurance companies, who have been salivating for millions of new customers to buy costly plans. But it is poor economic policy for laws and regulations to be structured to benefit one industry group. Surely the welfare of millions of Americans trumps the welfare of insurance companies.
Plaintiffs in Halbig v. Sebelius, a case currently under consideration by Judge Paul L. Friedman of the U.S. District Court for the District of Columbia, are suing to be allowed to claim the hardship exemption.
Under Obamacare, subsidies are only available for people on state exchanges, not federal exchanges, but the Internal Revenue Service extended the subsidies to the 34 federal exchanges. Plaintiffs argue that extending the subsidies to federal exchanges puts them at a disadvantage.
Without the subsidy, they could receive a certificate of exemption from the requirement to purchase health insurance. This would enable them to buy catastrophic health insurance — a privilege Obama granted to millions of Americans last week.
Friedman’s decision is expected shortly. So is a decision from Virginia Judge James R. Spencer in a similar case, King v. Sebelius.
Many Americans would like to purchase catastrophic insurance at lower cost. Family plans will cost $20,000 a year in 2016, according to the IRS. Although the Supreme Court has ruled it is legal for government to tax people if they do not have health insurance, it is unreasonable to make them purchase such expensive coverage.
Insurance means that people pay to be covered against unpredictable expenses. Requiring insurance companies to include free preventive care and contraceptives in policies is not insurance. Consumers are not insuring against unpredictable expenses, but purchasing prepaid health plans. Allowing people to insure against major expenses while paying for routine care out of pocket would encourage shopping around and would lower the cost of health care, as well as the cost of insurance.
All Americans generally have to be treated the same under the law. If Americans whose policies are cancelled and who face higher costs of insurance can claim a hardship exemption, why not everyone else? Many are facing higher insurance costs that pose a financial hardship.
Rather than relying on Obama’s ad hoc rule-makings, Congress should pass a law to allow anyone to buy catastrophic health coverage. It may be a piece of coal in the insurance companies’ stockings, but it would be a gift to many Americans.

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