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Escape from Obamacare

How to get health insurance while avoiding the exchanges.

Dec 30, 2013, Vol. 19, No. 16 • By JEFFREY H. ANDERSON and SPENCER COWAN
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Or take a healthy 31-year-old woman making $35,000 in Philadelphia. Again, according to the 2017 Project study, she could buy the cheapest bronze-level Obamacare plan for $2,586. (She too would get no subsidy.) Or she could buy a 364-day short-term plan​—​with wide-open doctor and hospital access and a $5,000 deductible​—​for just $1,070 annually. Adding in her Obamacare fine, she’d have to pay only $1,323​—​a savings of $1,263 versus Obamacare’s cheapest bronze plan.

By buying 364-day short-term plans extending from January 2 through December 31, the consumers in these examples would have coverage well into Obamacare’s next open-enrollment period​—​which runs from November 15, 2014 through January 15, 2015. If they remain healthy until that time, they could renew their short-term plans for the following year​—​or pick new ones. Or, if they’ve gotten sick or injured, they could jump ship to an expensive Obamacare plan, effective January 1, 2015. Even if they were to get sick or injured between December 15 and December 31 (in which case that new illness or injury wouldn’t be covered by a subsequent short-term plan), they could still enroll in a new Obamacare plan effective February 1, meaning their maximum coverage gap would be just one month.

This general approach would work in 33 states and the District of Columbia. In 13 other states, insurers don’t offer short-term plans spanning more than six months​—​whether by choice or because of state prohibitions. But they may start doing so soon, given such plans’ newfound attractiveness, and some states might help them. In Michigan, for example, the Republican-controlled statehouse might consider lifting the state’s existing six-month cap on such plans. Other states likely won’t prove so accommodating, including the four strongly left-leaning states (New Jersey, New York, Massachusetts, and Vermont) that have banned short-term plans outright.

For people living outside of such states, however, short-term plans offer an escape from Obamacare, courtesy of Obamacare.

Some on the left might be surprised that their favorite legislators failed to close such a loophole. Then again, sometimes you have to pass a law to find out what’s in it.

Jeffrey H. Anderson is executive director of the newly formed 2017 Project, which is working to advance a conservative reform agenda. Spencer Cowan is a research associate at the 2017 Project. 

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