On Wednesday the Trump Administration issued a final rule clearing the path for the sale of more health insurance policies that do not comply with the Affordable Care Act. They also do not have to cover maternity care, people with pre-existing medical conditions or prescription drugs.
The President had said that he believes that this new “short-term, limited duration insurance” stands to help millions of people who do not need or wish to have comprehensive health insurance that provides the full range of benefits required by ACA.
Mr. Trump has said that the new plans will provide “much less expensive health care at a much lower price.” The benefits will be lower, which will allow for the prices to be smaller, but insurers are not required to provide coverage for pre-existing conditions or to the people who have them.
Democrats have criticized the new policies as “junk policies” that will coax healthy people away from the standard insurance marker, causing premiums to rise for sicker people, putting purchasers at risk.
Representative Nancy Pelosi of California, the House Democratic leader, has said, “After an illness or an injury, many Americans who enroll in these G.O.P. junk health coverage plans will end up being hit by crushing medical bills, finding that they have been paying for coverage that doesn’t cover much at all.”
The current rule, issued by the Obama Administration in late 2016, states that short-term insurance can’t last for more than three months, because it was intended to be a stopgap. Under this new rule, the limit would be three hundred and sixty-four days. Insurers would be allowed to extend policies, but not required to do so. The duration’s maximum would be thirty-six months, including any extensions.
People struggling to afford coverage under the 2010 law may find the new options helpful. “These plans aren’t for everyone,” said Alex M. Azar II, secretary of health and human services, “but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
While stretching the general understanding of the terms, the new rule is packaged as a redefinition of “short-term limited duration insurance.” Some of the new policies could seem to be more attractive options for potentially healthier customers who are now paying higher prices for significant medical coverage but may be willing to take more risk in exchange for lower rates.
Paul Spitalnic, the agency’s chief actuary, estimates that short-term policy premiums would be about half the average premium for coverage sold in insurance exchanges under the Affordable Care Act. Roughly $340 compared to $620 next year.
Some insurance companies, doctors, hospitals, and consumer advocates have expressed concerns regarding the new plans, feeling they would not correctly protect people who develop serious illnesses and may destabilize insurance markets by luring away healthy people.
Those who purchase the new policies and develop cancer could “face astronomical costs” and “may be forced to forgo treatment entirely because of costs, “ said Chris Hansen, the president of the American Cancer Society Cancer Action Network.
Officials from the Trump administration have said they would require insurers to explain precisely what is and is not covered to their customers under new policies.
In just two months the new rule takes effect. Customers may see the new policies in October or November. Since the annual open enrollment period for the Affordable Care, act begins November 1st, so this may create a potentially confusing time for customers who generally shop for insurance that complies with the ACA during that time.
Short-term policies will be subject to state regulation. States will be able to restrict their sale or require specific benefits. Some states have indicated that they intend to do so.
Another rule issued by the Trump administration six weeks ago makes it easier for small businesses to band together to set up health insurance place that works around some of the requirements for the Affordable Care Act.
Assistant vice president of the American Lung Association, Erika Sward, described the rule on short-term insurance as “one more blow of an ax to stable state marketplaces.”
Over the course of the last year, the Trump administration has also cut funds for groups that assist people with signing up for coverage; asked the federal court to discard portions of the Affordable Care Act, including the protections for persons with pre-existing conditions and ended cost-sharing subsidies paid to insurers on behalf of those with low-income.
Some insurers see the new short-term plans as a potentially lucrative opportunity. While the UnitedHealth Group is still actively selling short-term medical plans through Golden Rule Insurance Company, they have largely withdrawn from the Affordable Care Act marketplace,
UnitedHealth says on its website that short programs are available for as low as $23.70 per month — for some unmarried women aged nineteen to twenty-four who do not smoke. These plans have a deductible of $10,000, which is $2,650 more than the out-of-pocket costs allowed under an Affordable Care Act-compliant plan.
A footnote on their webpage states, “Short-term health insurance is medically underwritten and does not cover pre-existing conditions.”
Starting October 1st, Jan Dubauskas, general counsel of healthedeals.com, a division of the Independence Holding Company, known as IHC Group, said her company would go to market with twelve-month plans in states that allow them. Such as Arizona, Arkansas, Oklahoma, and Texas.
Initially, these short-term plans were intended for people between jobs or who needed temporary coverage for other reasons.
“The new plans will no longer be just transition coverage. They will be an alternative to comprehensive insurance. They will split the market into plans for healthy people and plans for sick people,” said Mary Dwight, a senior vice president of the Cystic Fibrosis Foundation.
The administration has acknowledged that making short-term insurance more available, for more extended periods of time, could potentially raise the premiums for individual health insurance coverage in the Affordable Care Act marketplace. Federal costs also rise when premiums rise, because the government subsidizes premiums for more than eighty-five percent of people purchasing insurance in the marketplace.
The added cost to the federal government will total twenty-eight billion dollars over 1en years, according to an official estimate published with the new rule.
Federal subsidies are not available for short-term policies. The administration predicts that most of those who qualify for subsidies will stay in the public marketplace.
However, most people who switch from a marketplace plan to short-term insurance “will be relatively young or relatively healthy” and will likely have annual incomes higher than $48,000 for an individual or $98,000 for a family of four, making them ineligible for subsidies.
Administration officials have said they still wanted the Affordable Care Act repealed and replaced by Congress. Until that happens, said senior advisor to Mr. Azar, James Parker, “We are looking to do everything we can to take incremental steps that will make insurance coverage of any type more affordable.”