‘Short Term’ Health Insurance? Up to 3 Years Under New Trump Policy

The New York Times
By Robert Pear
Wednesday, August 1, 2018

WASHINGTON — The Trump administration issued a final rule on Wednesday that clears the way for the sale of many more health insurance policies that do not comply with the Affordable Care Act and do not have to cover prescription drugs, maternity care or people with pre-existing conditions.

President Trump has said that he believes that the new “short-term, limited duration insurance” could help millions of people who do not want or need comprehensive health insurance providing the full range of benefits required by the health law.

The new plans will provide “much less expensive health care at a much lower price,” Mr. Trump said. The prices may be lower because the benefits will be fewer, and insurers do not have to cover pre-existing conditions or the people who have them.

Under the current rule, issued in late 2016 by the Obama administration, short-term insurance cannot last for more than three months, as it was meant to be a stopgap. Under the new rule, the limit would be 364 days, and insurers would be allowed, but not required, to extend policies. The maximum duration, including any extensions, would be 36 months.

The new options will help people struggling to afford coverage under the 2010 law, said James Parker, a senior adviser to Alex M. Azar II, the secretary of health and human services. But Mr. Parker added: “We make no representation that it’s equivalent coverage. These policies will not necessarily cover the same benefits or extend coverage to the same degree.”

The new rule is presented as a redefinition of “short-term, limited-duration insurance.” But it stretches the common understanding of those terms, and some of the new policies could be an attractive option for healthier consumers who now pay high prices for major medical coverage and are willing to take more risk in return for lower prices.

“Short-term is getting longer!” one insurance marketing company advised clients this week.

Democrats deride the new health plans as “junk insurance” and say consumers will discover the limits of such plans when they become sick.

Randy Pate, a senior official at the Centers for Medicare and Medicaid Services, said the Trump administration expects 600,000 people to buy the new insurance policies next year, with enrollment increasing to 1.6 million by 2022.

The agency’s chief actuary, Paul Spitalnic, has estimated that premiums for short-term policies would be about half of the average premium for coverage sold in insurance exchanges under the Affordable Care Act, roughly $340 against $620 next year.

Consumer advocates, doctors, hospitals and some insurance companies expressed deep concern about the new plans, saying they would not adequately protect people who develop serious illnesses and could further destabilize insurance markets by drawing away healthy people.

People who buy 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.

Stung by such criticism, Trump administration officials said they would require insurers to tell consumers exactly what is and what is not covered under the new policies.

“There are individuals today who have been priced out of coverage” because of the Affordable Care Act, Mr. Parker said. “Until we have a more comprehensive replacement for the Affordable Care Act and Obamacare, we are looking to do everything we can to take incremental steps that will make insurance coverage of any type more affordable to those who today cannot afford insurance coverage.”

The new rule takes effect in about two months. The new policies, which will be subject to state regulation, could be on sale before the end of the year. States can restrict their sale or require specific benefits, and some states have indicated that they intend to do so.

In another rule, issued only six weeks ago, the Trump administration made it easier for small businesses to band together to set up health plans that skirt many requirements of the Affordable Care Act.

Erika Sward, an assistant vice president of the American Lung Association, described the rule on short-term insurance as “one more blow of an ax to stable state marketplaces.”

In the past year, the Trump administration has also cut funds for groups that help people sign up for coverage; ended cost-sharing subsidies paid to insurers on behalf of low-income people; and asked a federal court to throw out parts of the Affordable Care Act, including the popular protections for people with pre-existing conditions.

Some insurers that lost money in the Affordable Care Act marketplace see the new short-term plans as a potentially lucrative opportunity.

The UnitedHealth Group has largely withdrawn from the Affordable Care Act marketplace, but is actively selling short-term medical plans through its Golden Rule Insurance Company.

On its website, UnitedHealth says that short-term plans are available for as little as $23.70 a month — for some unmarried women aged 19 to 24 who do not smoke. The plans have a $10,000 deductible, which is $2,650 more than the out-of-pocket costs allowed under a plan that complies with the Affordable Care Act.

A footnote on the website says, “Short-term health insurance is medically underwritten and does not cover pre-existing conditions.”

UnitedHealth supported the Trump administration’s move to extend the duration of short-term policies, saying this would “ensure that more consumers have consecutive months of coverage and fewer consumers experience coverage gaps during a year.”

Short-term plans were originally intended for people who were between jobs or needed temporary coverage for other reasons.

But Mary Dwight, a senior vice president of the Cystic Fibrosis Foundation, said: “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.”