- Carlos Barria/Reuters
- The Trump administration is moving forward with a new plan to expand the use of short-term health insurance policies.
- Democrats said the new plan would undermine patient protections and drive up prices for sick Americans.
- Many health industry groups such as the AARP, American Heart Association, and America’s Health Insurance Plans have come out against the plan.
Democrats and healthcare groups are attacking the Trump administration’s latest healthcare plan as an attempt to undermine the core protections of Obamacare and increase costs for sicker Americans.
The Trump administration’s new plan would expand the use of short-term, limited-duration health insurance plans for people who have a lapse in coverage. Currently, if a person experienced a lapse in coverage, for example after the loss of their job, the individual can get a short-duration insurance plan. These plans last a maximum of three months until the individual can sign up for a longer-term plan through the Affordable Care Act exchanges.
Under the proposed rule, these plans could last as long as 12 months, and the Department of Health and Human Services (HHS) is considering letting people renew these plans at the end of the time limit. This would, in essence, allow someone to remain on the short-term plans in perpetuity.
HHS and the Trump administration argue that these expanded plans would give healthy Americans a lower-cost option for coverage, as compared to the more permanent plans found in the Affordable Care Act (ACA), or Obamacare, exchanges. But according to health policy experts, these plans could also cause trouble.
The problems with short-term plans
According to the Kaiser Family Foundation, a nonpartisan health policy think tank, these new plans could cause substantial changes to the individual insurance market – where people who do not receive coverage from an employer or government program access coverage.
In particular, said Kaiser, these plans have three major problems that could cause issues for both the people who sign up for short-term coverage and those who remain in Obamacare’s marketplace:
- The short-term plans are not as generous, which could cause problems for people on the plans who get sick. These plans do not have to adhere to all regulations laid out by the ACA, such as covering the 10 essential health benefits and lifetime limits on benefits. This means that a person who becomes ill while on one of the plans could face high out-of-pocket costs.
- Short-term plans can deny coverage based on pre-existing conditions or charge people more if they have a pre-existing condition. Even after a person gets sick after signing up for a short-term plan, said the Kaiser report, an insurer can investigate to determine if the illness counts as a pre-existing condition and retroactively deny coverage.
- More people leaving for short-term plans could increase costs for people who remain in the ACA marketplace. Young and healthy people help to lower the cost of premiums in the ACA marketplace. So as more of these young, healthy people shift to cheaper short-term plans, those who remain in the marketplace will be sicker, older, and more expensive to cover. In turn, premiums in the marketplace would increase.
While many people would get higher government subsides to offset the increased costs, many middle-class Americans who do not qualify for those premium subsidies would see large cost increases.
Democrats, industry groups express concerns
Given these limitations, Democrats expressed concern about the effects of the expanded plans in a letter to HHS Secretary Alex Azar, Labor Secretary Alexander Acosta, and Treasury Secretary Steven Mnuchin.
“Unfortunately, creating a new class of health insurance plans that lack basic patient protections and could lead to higher prices for seniors, those with pre-existing conditions, and any American who wants to purchase a plan ,” the letter said.
In addition to worries from Democrats, many health industry groups came out against the idea, including AARP, the American Heart Association, the American Academy of Family Physicians, and others. America’s Health Insurance Plans, the largest insurance lobby in the US, also came out against the expansion of the short-term plans.
“We are concerned that this proposed rule will lead to more people being uninsured and under-insured, and to higher costs in the long run,” AHIP CEO Matt Eyles said in a statement on Monday. “Short-term plans can provide an important temporary bridge for Americans who are transitioning between plans. But they are not a replacement for comprehensive coverage.”
The public comment period on the rule ends Monday and a final rule is expected to be released in the coming months.