Policy

Health Groups Voice Concerns Over Short-Term Plan Proposal

Industry frets that premiums will rise, choice will go down

People shop for health insurance in Miami during the open enrollment period last November. Advocacy groups are concerned an expansion of short-term plans could push up premiums for plans sold on health exchanges. (Joe Raedle/Getty Images file photo)

The health care industry is largely united in its opposition to the Trump administration’s proposal to expand how long people can be covered by short-term health plans.

Health care and advocacy groups raised concerns about allowing consumers to maintain a short-term insurance policy for just under 12 months rather than the current 90 days, providing an alternative type of coverage to that sold on the marketplaces set up under the 2010 health care law. Their comment letters to the administration predicted that the proposal would drive up premiums and decrease consumers’ choices for plans sold on the exchanges.

Comments on the proposal were due to federal agencies Monday.

The Trump administration paints the expansion of short-term plans as a cheaper substitute for policies sold on the exchanges. Short-term plans don’t have to comply with certain health care law regulations, such as requirements to pay for 10 categories of benefits and offer coverage to all patients without charging more or denying coverage for pre-existing conditions.

A report released Monday by the nonpartisan Kaiser Family Foundation found that costs of short-term plans could be 20 percent or less the price of the lowest-cost bronze plan compliant with the health care law. Short-term plans were less likely to cover services such as mental health care, substance abuse treatment and outpatient prescription drugs. None of the plans reviewed covered maternity care.

Policy experts say the expansion of short-term plans could push up premiums for plans sold on the exchanges. The Urban Institute found an increase of as much as 18.3 percent when combined with an effective repeal of the individual mandate to have health insurance that will take effect next year.

But conservatives praised the administration’s move as a step away from the “one-size-fits-all regulations of the ACA’s exchanges.” The comment came in a letter from the Koch brothers-backed groups Freedom Partners, Americans for Prosperity, Generation Opportunity and the LIBRE Initiative.

“The proposed rule, however, can facilitate a much-needed alternative for those consumers stuck between an insurance plan that is too expensive and going completely without insurance altogether. [Short-term, limited-duration] plans, in their flexibility and affordability, are precisely the kinds of market-based health coverage options that Americans deserve,” they wrote.

Insurer and patient concerns

Currently, individuals covered by a short-term plan face fines for not having health insurance coverage as required by law. Congress mandated that the penalty for not having coverage that meets federal guidelines be eliminated next year, which could encourage more consumers, particularly younger and healthier consumers who don’t expect to use much medical care, to opt for a short-term policy.

That could leave more sick people among the consumers for marketplace plans, driving up premiums for those plans, industry groups say.

“It is predicted by health policy experts that the proposed expansion of [short-term, limited-duration insurance] will undermine the individual insurance market and create an uneven playing field by luring away healthy consumers, thereby damaging the risk pool and driving up premiums for consumers left in the ACA-compliant market,” James Madara, the CEO and executive vice president of the American Medical Association, wrote in the group’s comment letter.

The Obama administration in 2016 reduced the amount of time an individual can remain on a short-term plan to three months, so the Trump administration is proposing a return to an earlier standard.

But insurers say the longer standard could worsen an already unstable marketplace. America’s Health Insurance Plans, the primary trade group representing insurers, suggested a maximum duration of six months, while the Blue Cross Blue Shield Association urged the administration to keep the maximum length at three months.

“It would be counterproductive to change the federal requirements for short-term limited duration insurance in ways that increase prices for individuals with preexisting conditions who are not eligible for premium subsidies, particularly since it is unlikely any additional market stability funding is going to be available for 2019,” the Blue Cross Blue Shield Association said. “Congress, the Administration, and the states should work to stabilize the individual market — not simply create a parallel market that works only for healthy people.”

Both groups were among several that suggested a final rule on short-term plans not take effect until January 2020, which would give insurance carriers and state regulators more time to implement it.

Nearly two dozen patient groups said the proposal could leave patients with serious illnesses with “insufficient coverage,” and revert back to the challenges they faced before the enactment of the health care law. Those patients would likely be unable to purchase short-term plans because they have pre-existing conditions and because short-term policies likely wouldn’t cover the services they need.

Not only would they expect premiums to increase, the number of plans they have to choose from could fall, they say.

A group of 45 Senate Democrats and the two independents who caucus with them urged the administration not to finalize the proposal, saying it would discriminate against older consumers and those with pre-existing conditions.

“If finalized, the rule could increase costs and reduce access to quality coverage for millions of Americans, harm people with pre-existing conditions, and force premium increases on older Americans,” they wrote in a letter.

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