Published: Sat, August 04, 2018
Medical | By

Trump's cheaper short-term health plans have coverage gaps

Trump's cheaper short-term health plans have coverage gaps

The Trump administration on Wednesday cleared the way for insurers to sell short-term health plans as a bargain alternative to pricey Obama-law policies for people struggling with high premiums.

The plans don't have to comply with Affordable Care Act rules including: coverage of essential benefits; prohibition against medical underwriting; limits on premium variations based on age, sex or health status; elimination of annual and lifetime benefit caps; annual limits on out-of-pocket costs; and the requirement that plans spend no more than 20% of premiums on administrative costs and profit.

Under the Trump administration directive, insurers also can renew the short-term coverage for the same amount of time as the original plan - maxing out at 36 months. Before, short-term plans could not last longer than three months.

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"This will at least provide a little bit of relief for people who are otherwise essentially forgotten by the Affordable Care Act", Antos says.

The real fear of critics of these plans is that they will give people an option other than the Affordable Care Act exchanges-and, if there is such an option, people will use it and harm the exchanges.

It's unclear how that might happen, since versions of such plans have always been available - including during the Obama administration.

Up to now, short-term health insurance has been a niche product, covering people for several months or less than a year.

HHS estimates that about 200,000 people will buy short-term policies next year and as many as 1.6 million could own them after five years.

Since Congress failed to repeal the Affordable Care Act past year, President Donald Trump has attempted to weaken the program through eliminating protections, discouraging enrollment, and driving up costs, the lawsuit argues. Three-quarters of respondents to a recent Kaiser Family Foundation poll said it is "very important" that Obamacare's rule prohibiting insurers from denying coverage due to a person's medical history remains law, while almost that many feel the same way about banning insurers from charging sick people higher rates.

Some in the industry say they're developing "next generation" short-term plans that will be more responsive to consumer needs, with pros and cons clearly spelled out. The plans have limits on coverage.

Many of those people have been priced out of the health insurance market since the ACA took effect, says Joseph Antos, an economist at the American Enterprise Institute.

According to NBC News, this lawsuit states that the president has "waged a relentless effort to use executive action alone to undermine and, ultimately, eliminate the law".

However, Edmund F. Haislmaier, senior health policy researcher of the conservative Heritage Foundation, said people who are already sick and getting Obamacare subsidies will not be affected. "There is a relatively small risk to the insurance company on what they would pay out relative to those plans".

That same report expects premiums for ACA plans to increase 15 percent next year, in part because many consumers may be less likely to buy coverage without the threat of a tax penalty. Such plans can be offered across state lines and are also designed for self-employed people.

Nonetheless, the CEO of a company that offers short-term plans said they're a "rational decision" for some people.

They also argue that they're just another way for the administration to undercut the Affordable Care Act by enticing healthy people from its markets and causing premiums to rise even more for those who remain.

But a recent Kaiser Foundation analysis found turmoil in the unsubsidized market.

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