In In 2016, the Obama administration reduced the length of short-term health insurance plans from 12 months to three months because the services offered under these plans did not meet the minimum standards of coverage outlined by the Affordable Care Act. Specifically, they were viewed unfavorably because of their lack of coverage towards the ACA’s ten essential health benefits and pre-existing conditions.
On Tuesday, the Trump administration proposed a rule to expand the coverage length of short-term health insurance plans from just under three months back to a year as a solution to increase coverage options for Americans, particularly those that are younger, healthier and uninsured either by choice or due to financial reasons.
“This is why we were struggling with the younger, healthier people because if they did not qualify for subsidized coverage, the options on the market could be unaffordable,” HHS Secretary Alex Azar said. Although, he acknowledged that these types of short-term plans were not for everyone, “We need to be transparent about for whom this makes sense, and for those, it doesn’t.”
Those in favor of the proposed rule explain it as a way to bring health insurance to those who cannot afford Obamacare plans, are in between jobs, and for those who cannot see their preferred doctors due to narrow network plans.
“Today’s announcement is about giving Americans who have been priced out of the market new, more affordable coverage options and allowing them, not the government, to make decisions about what works best for them and their families,” stated Seema Verma, CMS Administrator, in a press conference on February 20th. “While in the past these plans have been a bridge, now they could be a lifeline.”
“There are healthy people who are sitting on the sidelines without coverage, and this is an opportunity to provide them an opportunity for coverage whereas right now they might not have that,” Verma added.
These healthy citizens make up a sizable percentage of the 28 million people who are uninsured currently in the United States making them a clear target for the proposal’s purpose.
Those opposed to the prospective rule argue that it could cause disruptions in the individual insurance market and cause plan premiums to rise because of how short-term plans can lead healthy people away from insurers leaving them with only the unhealthiest patients as members. This “run” on health insurance could cause insurers to leave the market because of financial losses and gift those looking for insurance with even fewer options. Others believe that limited duration insurance options are “junk” because of their lack of coverage when it comes to preexisting conditions or more serious medical emergencies and put the consumer at risk of receiving medical bills they can’t afford.
Additionally, although switching from an ACA approved plan to a less extensive limited duration health insurance plan may save consumers money on premiums, it may lead to higher out of pocket costs, limited provider options, or fewer services covered than their original ACA plans. Despite these risks, it’s expected that between 100,000 and 200,000 people will switch from an ACA approved plan to a short-term health insurance option in 2019. If approved, insurers will be required to explicitly list all the services that differ from an ACA health insurance plan.
“These plans can be effective stopgaps. But they are not functional as full-time health coverage products, and it would be a shame for consumers to find out the hard way should this proposed regulation go into effect,” explained CEO of the Association for Community Affiliated Plans, Margaret Murray.
The proposal stems from an executive order aimed at federal agencies to allow more people to access these short-term insurance plans. Some big-time players in the insurance industry like United Healthcare and Aetna have already capitalized on the President’s order.
Aetna CEO Mark Bertolini hoped to ease some concerns in a statement to investors that they plan to release limited duration options for their customers, but the plans won’t just be “skinny” ones, meaning Aetna might be already working to address some concerns across the aisle.
Ultimately, the success or failure of the proposed extension for these short-term plans will hinge on whether these plans are effective in bringing, real, comprehensive health coverage to those who need it and reducing the number of medical bankruptcies that cost the country so much every year.
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