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The new rule would extend short-term insurance plans, circumventing key Obamacare requirements such as covering pre-existing conditions. “The key part of Obamacare was creating a unified insurance market where anyone can get insurance regardless of their heath, and this is destroying that,” says economist Dean Baker

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GREG WILPERT: Welcome to The Real News Network. I’m Greg Wilpert coming to you from Quito, Ecuador. On Tuesday, the Trump administration took another step toward dismantling the Affordable Care Act, or Obamacare as it is also known. Health and Human Services Secretary Alex Azar announced that short-term insurance plans would be expanded from three to 12 months. Short-term plans do not need to follow all of the Obamacare requirements, such as covering pre-existing conditions, mental health problems, maternity care, and addiction, for example. Democratic lawmakers immediately rejected the new rule. Senate Majority Leader Chuck Schumer, for example, tweeted: “Since day one, the Trump administration’s playbook on healthcare has been to sabotage marketplaces, jack up costs and premiums, and then offer junk insurance that fails to offer protections for those with pre-existing conditions, coverage of essential health benefits, and more.” Trump administration officials, though, say that expanding short-term care will give consumers more lower priced options for health insurance.
Joining me to discuss the latest change to Obamacare is Dean Baker. Dean is senior economist at the Center for Economic and Policy Research and is the author of <i>Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.</i> Welcome back, Dean.
DEAN BAKER: Thanks for having me on.
GREG WILPERT: So, first of all, what is the most important consequence, would you say, of expanding short-term insurance coverage from three to 12 months?
DEAN BAKER: Well, these were less highly regulated policies and they’re proposing to regulate them even less than have previously been the case. The original idea in the Obamacare plan as it was set up is that okay, people change jobs, they move into a state, there are a lot of reasons why you might wanna be in a plan for a short period of time and you need to be less concerned about that plan meeting all the requirements of a longer term plan. If it’s three months, it may not be that big a deal. This makes it 12 months and totally throws out … or I shouldn’t say totally … throws out many of the regulations put in the Obamacare, most importantly the one on pre-existing conditions. So they could say, “Okay, we’re only giving insurance to healthy people.” Or alternatively they could say, “Okay, if you have a health issue we’ll give you insurance. We’re just gonna charge you $20,000 a year for it.”
And the big issue here is that that fragments the market. If I’m a healthy person, I have relatively few health needs, I could go ahead and get a high deductible policy. They’ll sell that to me ’cause I’m a healthy person. And what that means is the rest of the market is less healthy. Those plans become more expensive. That’s exactly the world we were in pre-Obamacare when we had another 25 million people without insurance.
GREG WILPERT: So what is the purpose though of short-term coverage anyway? Shouldn’t all people be covered as long as possible?
DEAN BAKER: Well, ideally they would be. But again, someone may not wanna pay for a full year policy if they’re only gonna be in the state for three months, they’re about to get a job that will give them insurance through their employer. There’s all sorts of reasons why you might not want to sign up for a full year plan. So the idea was that you could have plans that just fill the gap, a short-term gap.
GREG WILPERT: So the Trump administration though is saying that this policy change would only affect between 100 and 200 thousand people and that this wouldn’t be enough to impact the premiums for those who have long-term health insurance plans. What do you make of this argument that it’s really not going to impact the market as you said?
DEAN BAKER: Well, a couple points. First off, if we’re just looking at the market and the exchanges, that’s only around 10 or 12 million people. So even their 100-200,000 number, that’s about 2% of that market. But the other point is that that will grow through time. So if we just say right now how many people that affects given the market today that number may well be right. But over time a lot of people will say, “Well, I’m relatively healthy. I could get one of these short-term plans. They’ll give me a good rate because I’m in good health.” So telling me that this year will only affect 100-200,000, again that’s probably a plausible number. But if we look out three, four, five years you’re probably talking about a very, very different world where you have a lot of relatively healthy people signing up for these plans. They’ll save money. No doubt about it. That’s exactly the point.
GREG WILPERT: So, Republicans actually also eliminated the individual mandate which required all U.S. citizens to have health insurance, and this was back in December, I believe. Now, according to some reports, the Trump administration’s even considering to expand the short-term insurance beyond one year. Now, what would you say is the cumulative effect of all of this? Is this a death blow to Obamacare?
DEAN BAKER: Pretty much, yeah. I mean, the key … To my view, the key part of Obamacare was creating a unified insurance market where anyone can get insurance regardless of their heath and this is destroying that. So what this means is we’ll be back to the world pre-Obamacare where, suppose you have a heart condition, suppose you’re a cancer survivor, you either won’t be able to get insurance at all or if you do have a company that’s offering to sell you insurance, they’re gonna want 50, 60, 70,000 dollars a year. That’s what people paid or faced. I mean not many people could afford to pay that. But those were the sorts of premiums a person with a serious health condition would have faced pre-Obamacare. We’re going to be back in that world. And it’s incredibly cynical, ’cause people in good health can get insurance. That’s nice. But, of course, they aren’t the people who really need it. So as long as you don’t really need insurance you’ll be able to get it. Great.
GREG WILPERT: So looking ahead, what do you think might be the longer term consequence in terms of the possibilities of getting some kind of Medicare-for-All or a single-payer system, considering that so many people are going to be negatively impacted by higher premiums and lack of coverage?
DEAN BAKER: Well, I think the Democrats are already more involved and we saw that 17 Senate Democrats were co-sponsoring the single-payer type plan or Medicare-for-All type plan that Bernie Sanders was the lead sponsor of. And I think this is just gonna lead to more support ’cause basically if you destroy Obamacare, if you talk about saving it and preserving it and making it better, if you’ve destroyed it well then that’s no longer the starting point. The question is where do you move from and I think we can talk about moving towards a universal Medicare system.
I think it’s very likely we’ll have things like, say, lowering the Medicare age to maybe 60. I don’t know if we’ll do that in a single year but we’ll do that. And having some sort of buy-in, a universal public option. And other reforms like that that could hugely extend coverage even though, as I said, we’re not gonna get to universal Medicare all at one leap but we could certainly make a lot of good progress. And I think the Democrats will be emboldened to push that way given, really pretty outrageous plan proposals on the Republican part.
GREG WILPERT: Okay. Well, we’ll leave it there for now as we continue to follow the development. I was speaking to Dean Baker, senior economist at the Center for Economic and Policy Research. Thanks for having joined us again today, Dean.
DEAN BAKER: Thanks for having me on.
GREG WILPERT: And I’m Greg Wilpert for The Real News Network.

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Dean Baker

Dean Baker is co-director of the Centre for Economic and Policy Research