Trump Administration backs plan to extend short-term health insurance policies in an effort to reduce costs.Under the direction of the Trump Administration, the Department of Health and Human Services (HHS) has proposed increasing the duration of short-term health insurance plans from three months to a year. Administration officials believe that doing so will give some individuals a less expensive option than what is currently available through the Affordable Care Act (ACA) exchanges.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” HHS Secretary Alex Azar said in a statement. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump Administration is taking action so individuals and families have access to quality, affordable healthcare that works for them.”
According to a HHS fact sheet, short-term health plans had monthly premiums of $124 as of the end of 2016, compared to $393 for unsubsidized ACA policies. If the proposal is enacted, the agency estimates that 100,000 to 200,000 people would shift from the ACA to expanded short-term health insurance in 2019.
Not Bound by ACA Mandates
Similar to a Trump Administration proposal to permit small businesses to band together to buy health insurance without some ACA-mandated benefits, the short-term policies under the HHS plan would allow insurers to disallow coverage for certain items such as maternity care, prescription drugs, and mental health treatment. The short-term plans would also exempt insurers from the ACA rule that prohibits charging individuals with pre-existing conditions higher premiums.
Short-term health insurance plans are chiefly intended for people who need temporary health coverage due to a job change or other life situations. The Obama Administration capped short-term insurance at three months in an effort to prevent people from using these policies as a substitute for ACA plans.
Like the debate surrounding the potential repeal of the ACA, HHS’s short-term health insurance proposal ignited fierce arguments for and against it. Advocates contend that these policies offer an affordable option to counter skyrocketing ACA premiums. Doug Badger, a visiting fellow at the conservative Heritage Foundation and a senior fellow at Galen Institute, said in a statement that the proposed rule change “provides much needed relief” for Americans priced out of the ACA marketplace.
Centers for Medicare and Medicaid Services Administration (CMS) Seema Verma told the New York Times that the change would not disrupt the individual marketplace. Short-term plans, she added, would appeal to healthier individuals currently foregoing coverage.
The prospect of younger, healthy persons exiting the ACA exchanges in favor of extended short-term plans has raised objections among critics of the proposal, who say that an exodus of healthier people from the ACA insurance pool could lead to higher premiums for sicker individuals. A spokesperson for America's Health Insurance Plans (AHIP) said that it was “concerned that expanded short-term policies … would lead to higher premiums for many consumers, particularly those with pre-existing conditions.”
Other critics expressed concerns about inadequate coverage in the event a short-term insured requires extensive medical care. Linda Blumberg, a senior fellow in the Health Policy Center at the Urban Institute, termed the short-term plans “very narrow” in an interview with Consumer Reports. “If you do get sick, you may not be able to afford or access the care you need,” she said.
Unveiled on February 20, the plan must be available for public comment for 60 days before it’s revised and becomes law. Regulators specifically want to gather information about how the change will impact insurers’ participation in the short-term health insurance market, as well as the age and health of potential enrollees in such plans.According to a report from ThinkAdvisor.com, analysts from the CMS and the Employee Benefits Security Administration (EBSA) have predicted that monthly premiums for ACA policies will rise only $4 to $718 if 200,000 ACA enrollees switch to extended short-terms plans. During the comment period, HHS intends to seek further input into whether those projections are accurate.