Adam Sullivan: Iowa offers another option to those left behind by Obamacare

Jan. 24--Iowans stuck in the Obamacare gap -- too rich to receive insurance subsidies, but too poor to comfortably afford a plan outright -- finally are getting more options to obtain health care coverage.

Insurance regulators in Iowa hope newly authorized short-term health plans -- criticized as "junk plans" by Obamacare supporters -- will be a suitable in-between solution for people who choose not to pay exorbitant prices for full health insurance plans.

The Affordable Care Act, signed in 2010 by President Barack Obama, sought to expand insurance coverage by requiring Americans to be covered. It also imposed lofty minimum standards for what plans must include, which drove up the price of coverage. To address costs, the law provides subsidies to income-qualified people to limit the percent of income they pay for health care.

It might have sounded nice in theory, but we now know it did nothing to contain overall health care spending and left many Americans burdened by the cost of the plans they were required to hold.

A single person in Iowa with an income of $50,000 does not qualify for subsidies through the marketplace. An unsubsidized silver plan from healthcare.gov would cost $211 per month this year, according to the Kaiser Family Foundation, plus thousands in out-of-pocket costs. A family of four earning $100,000 receives no subsidy and would pay $746 per month in premiums.

Under the Obama administration, most Americans in those situations were forced to either buy the unsubsidized plan or make a "Shared Responsibility Payment," also known as a tax penalty under the individual mandate.

The individual mandate and tax penalty ended last year under a law passed by Congressional Republicans and signed by President Donald Trump. Americans in most states now are free to forgo insurance, or buy cheaper plans that do not meet ACA standards.

Here in Iowa, regulators recently announced the availability of "short-term, limited-duration" health plans offered by five approved companies. That follows the Iowa Insurance Division's finalization last year of state regulations for benefits, minimum coverage and out-of-pocket expenses.

Short-term plans are significantly cheaper because they are not subject to ACA coverage requirements and taxes, and because providers can exclude people with preexisting conditions, making their customer pool healthier and cheaper to cover.

Critics in the insurance industry call them "junk plans," claiming they do not cover basic necessities, but many experts disagree.

Dan Walterman, owner of Premier Health Insurance of Iowa, said his family's short-term plan saves him about $1,500 per month compared to an ACA-compliant plan. He said it's "a full-blown, regular health insurance plan" with the exception of maternity care, which his family doesn't need now.

Walterman said short-term plans aren't a permanent solution to curb health care costs, but they are a good option for certain healthy middle-class people who can't afford unsubsidized Obamacare plans.

"Do you want to penalize everyone for someone else being sick? Do you want to force someone to buy a plan they can't afford to continue the ACA?" Walterman said.

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