House Democrats Back Bill That Would Result in 500,000 People Losing Health Insurance

A new Congressional Budget Office report shows the consequences of undoing Trump-era rules on less regulated health coverage.

Democrats have spent years complaining that Republican health care legislation would result in fewer people with health insurance, often while pointing to Congressional Budget Office (CBO) estimates showing just how many would go without coverage. But now Democrats in the House are backing legislation that would result in 500,000 people losing coverage, according to a new report from the CBO.

The bill would prohibit the sale of renewable short-term health plans allowed by a Trump administration rule that went into effect last year. These plans, which can be extended for up to three years, tend to offer more limited coverage than the plans sold under Obamacare's rules, and they also tend to be significantly less expensive. If the bill were to go into effect, about 1.5 million fewer people would end up purchasing short term plans, CBO estimates. About half a million of those people would end up purchasing coverage through Obamacare's exchanges instead. Others would obtain coverage through their employers. And about 500,000 "would become uninsured." That is, half a million people who had coverage would lose it—and replace it with nothing.

The bill would also have a modest effect on the deficit, resulting in a decrease of about $8.9 billion over the next decade. For context, CBO projects the deficit will total about $900 billion in 2019.

Although the bill is unlikely to become law while Republicans hold the Senate and the White House, House Democrats in both the Energy and Commerce and Education and Labor committees have already voted to support it. 

The bill's effects are smaller than those of the GOP repeal legislation introduced during 2017, and total coverage may not be the only or best metric by which to judge such legislative proposals. Nevertheless, the bill exposes one of the fundamental rifts in today's health policy debates—the division between those who believe health insurance plans should be required, by law, to offer a comprehensive suite of benefits, and those who believe in allowing for more customized and personally tailored options. Essentially, it is an argument about whether politicians and bureaucrats should design coverage, or whether it should be left to individuals to choose for themselves.

That divide was reflected in the structure of Obamacare, which required health insurance plans to offer a suite of "essential health benefits," from maternity care to mental health, and outlawed an array of existing plans that offered more limited coverage.

The benefits of such comprehensive plans are plain: They offer a broad spectrum of benefits. But so are the drawbacks: They tend to be substantially more expensive, which is one reason why the price of unsubsidized plans sold through Obamacare's exchanges has soared.

In a report on short-term plans last year, for example, The Washington Post noted the case of one Iowa man who purchased a short term plan for $90 a month; the Obamacare-approved alternative would have cost about $450. Individuals and families have struggled to afford the more heavily regulated plans offered under the law, and some have simply been priced out of the market.

Rather than allow those people to purchase less expensive plans, even as a fallback option, the Obama administration restricted their sale, with backers of the health law deriding them as "junk insurance." In this view, a second-best option is not worth allowing at all. 

Yet as Michael Cannon, the Cato Institute's health policy director, has pointed out, those plans can fill gaps in Obamacare's coverage scheme. With some exceptions, the health law's exchanges only make new coverage available during a few weeks or months at the end of each year known as an open enrollment period. Someone who purchased a three-month plan under the Obama-era rules in, say, January, would not be able to extend it and could find themselves unexpectedly sick and unable to renew the coverage for months. Allowing short-term plans to last for a year, as the Trump rule does, offers them a better option.

But these sorts of options are apparently not what Democrats have in mind when they say they want to expand coverage. Instead, they appear willing to potentially allow hundreds of thousands of people to go without coverage entirely in order to prevent anyone from having coverage they deem insufficient.