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Research & Commentary: Missouri Should Expand Short-Term Health Insurance

April 12, 2018

In this Research & Commentary, Charles Katebi examines a new proposal in Missouri to expand short-term insurance as an affordable option to Obamacare.

As a result of the Affordable Care Act, commonly called Obamacare, families in Missouri have fewer health care plan choices and higher premiums. Fortunately, a new proposal in the Missouri General Assembly would undo Obamacare’s damage and expand affordable health insurance options to all residents of the Show-Me State.

State Rep. Justin Hill (R-St. Charles) recently introduced legislation that would allow consumers to purchase health coverage known as short-term health insurance for a maximum single period of 364 days. Currently, short-term health insurance plans are limited to three months and are generally used to cover gaps in coverage between open enrollment periods.

Can a healthy individual who buys one of these plans, get sick, and then renew the plan with the same low premiums and benefits as before?

Since Obamacare was implemented in 2014, consumers looking for more affordable options have flocked to short-term plans. Unlike traditional health insurance plans, short-term insurance plans are exempt from Obamacare’s abundant insurance regulations and mandates, which drive up health care costs. For example, insurers are free to offer short-term plans that don’t include the law’s mandated essential health benefits (EHBs). EHBs increase premiums and deliver little, if any, value to consumers.

Short-term health insurance providers can also offer young and healthy individuals discounted premiums through medical underwriting, a practice Obamacare expressly forbids major medical plans from performing. As a result, healthy people can purchase short-term insurance for significantly less than the cost of Obamacare exchange plans. For instance, in Missouri, individuals can purchase short-term insurance for as little as $63 in monthly premiums. By contrast, since Obamacare has gone into effect, the average price of health insurance in Missouri has increased from $235 per month in 2014 to $434 a month in 2018.

Short-term insurance offers many families struggling to pay for coverage in the individual market access to affordable plans, but their three-month maximum coverage period is too limited and requires people to constantly renew their coverage. By expanding short-term plan coverage periods to as long as one year, these health insurance options would become much more useful to tens of thousands of families across Missouri.

Short-term plans would extend health insurance to individuals who can’t afford Obamacare’s expensive premiums. The left-leaning Urban Institute estimates if short-term health insurance plans were expanded, 40,000 individuals who are currently uninsured would gain coverage.

The Missouri proposal is part of a national effort to deliver viable alternatives to Obamacare at the state and federal levels. In January, the Trump administration introduced new rules that will allow small businesses to offer less expensive coverage through association health plans. In February, Alex Azar, the secretary of the Department of Health and Human Services, announced new regulations that will let consumers buy short-term insurance plans for up to 12 months. Rep. Hill’s legislation would cement these patient-centered reforms into Missouri state law.

After years of Obamacare’s rising premiums, increasing deductibles, and diminishing choices, expanding short-term health insurance would allow Missouri families access to reliable and affordable health coverage. Lawmakers should implement these commonsense solutions, as well as additional reforms that would improve the affordability and quality of health care.


The following documents provide more information about free-market health insurance reforms:

Trump Executive Order Could Save Millions from ObamaCare
Michael Cannon, director of health policy studies at the Cato Institute, examines President Donald Trump’s executive order expanding affordable health insurance options for consumers. “President Trump today signed an executive order that urges executive-branch agencies to take steps that could free millions of consumers from Obamacare’s hidden taxes, bring transparency to that law, and give hundreds of millions of workers greater control over their earnings and health care decisions,” said Cannon.

Trump Administration Restores an Escape Valve From Obamacare’s Insurance Regulations
Avik Roy, president of the Foundation for Research on Equal Opportunity, examines in this Forbes article new regulations introduced by the Department of Health and Human Services that will deregulate short-term, limited-duration health insurance. “The Trump administration has now proposed new rules under which these affordable STDL plans would once again be available to those who want them, for up to 364 days,” Roy wrote.

How Trump Is Bringing More Affordable Insurance for Small Businesses
Josh Archambault, senior fellow on health care policy at the Pioneer Institute, examines new regulations to allow small businesses to enroll workers in association health plans. “Small employers have seen significant health insurance premium inflation since the passage of the Affordable Care Act, combined with restricted choice of plans to offer their workers—AHPs could provide valuable new options for coverage and encourage more small firms to provide health coverage to their employees,” wrote Archambault.

Premium Reconciliation and Pre-ACA Deep Dive
Mckinsey & Company analyzes the impact of Obamacare insurance regulations on the premiums of individuals of various ages. “Obamacare mandates related to pre-existing conditions, including guaranteed issue (the requirement that insurers issue plans to any applicant) and community rating (the requirement that insurers charge the same premium to individuals regardless of health status, use of services, etc.), were the chief drivers of premium increases in the markets analyzed. The analysis shows that these mandates, along with other risk factors, have been responsible for 41 percent to 76 percent of the premium increases in the markets analyzed,” wrote Mckinsey & Company.

Don’t Wait for Congress to Fix Health Care            
Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs, or submit even more ambitious requests for waivers to the Department of Health and Human Services—a procedure the Trump administration has encouraged.

Section 1332 State Innovation Waivers: Current Status and Potential Changes
The Kaiser Family Foundation provides an overview of Section 1332 Medicaid waivers, how they are approved and financed, how states have used them, and how they have impacted health care reform.

How Premiums Are Changing in 2018
Kaiser Family Foundation researchers examine the premium rate increases consumers face in Obamacare marketplaces, which have occurred in large part because of the drop in insurer participation.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website and PolicyBot, Heartland’s free online research database.

If you have any questions about this issue or The Heartland Institute’s website, contact Charlie Katebi, The Heartland Institute’s state government relations manager, at or 978-855-2992.

Charlie Katebi was a state government relations manager at the Heartland Institute.