The Trump administration’s proposal to increase how long consumers can maintain a short-term health insurance policy offers states an opportunity to either rebel or endorse the change.
While officials in some states are looking to reject the proposed rule — which would allow people to be covered by a short-term, limited duration health plan for 364 days — others have sought to codify the proposal in state law.
Short-terms plans are not required to meet the requirements of the 2010 health care law.
“They’re not defined as health insurance, which is why they’re sort of treated under a different framework” under federal law, said Sarah Lueck, a senior policy analyst at the left-leaning Center on Budget and Policy Priorities. “That doesn’t mean that the state can’t do something different.”
Some states already have limitations on short-term policies, and they could further steps to restrict them, experts say. They could set their own guidelines for how long people can be covered, require short-term plans to comply with all or some existing rules, set a minimum percentage of premium dollars that must be spent on patient care or improve communication with consumers.
States also have the ability to ban the sale of short-term plans outright.
Any state that wants to take steps to affect their individual marketplace in 2019 must act quickly, said Sabrina Corlette, a research professor at the Georgetown University Center on Health Insurance Reforms.
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For those who want to block short-term plans, it may not take much to deter companies from seeking to market such policies in their states, she said.
Requiring plans to cover preexisting conditions or spend a minimum amount of premiums on health care “may be enough in itself for a company to say ‘I don’t want to work in your state,’” Corlette said.
Such moves could be politically risky, even in states that are not controlled by Republicans, she said. The Trump administration is touting the sale of short-term policies as an avenue for consumers who don’t receive financial assistance for health insurance to find less expensive options.
“Many of them feel pressure to have an answer for people who say, ‘I can’t find affordable coverage,’” she said. “These short-term plans have some sort of appeal, unless you’re talking to the constituent who’s a cancer survivor or a young family who wants to have kids.”
In Washington, the state’s insurance commissioner, Mike Kreidler, is set to begin the rule-making process in early March, though a spokeswoman declined to say exactly what that would entail. Washington already has a three-month limit on the duration of short-term policies.
“Just like the rest of the health insurance market, these plans would be required to be approved by my office,” he said in a statement last week.
Maryland lawmakers are considering a bill that would implement a state-level coverage requirement similar to the current federal requirement. That measure could be amended to clarify that short-term coverage or coverage under an association health plan would not count, and consumers would still be enrolled automatically in a more comprehensive policy as part of the bill’s auto-enrollment proposal, said Stan Dorn, a senior fellow at Families USA.
“The goal here is to make sure that these products don’t get traction in the marketplace,” Dorn said, adding that the plans are “often fly-by-night companies.”
Lawmakers are considering another amendment that would strengthen the consumer notice requirement for short-term plans sold in the state, Dorn said.
But in Virginia, the Republican-controlled state Senate passed a bill that would authorize insurance carriers to sell short-term policies with a maximum duration of 364 days in the state if the federal regulation is finalized. The bill is currently pending in the House of Delegates.
Last week’s proposed rule could have major effects on state marketplaces if enough healthy consumers opt for short-term plans instead of the plans offered under the 2010 health care law. An Urban Institute report released this week projected that average premiums could increase nearly 20 percent for 2019 because of the proposed rule and the elimination of the penalty for not having insurance coverage beginning next year.
States with limits on short-term plans would be shielded from that increase, the report said.
For example, the report projects that the nongroup coverage in Michigan, which limits the length of short-term contracts and requires coverage of some individual market benefits, would decrease by 10.8 percent because of those laws.
“The effects of the expansion of STLD policies on nongroup coverage also vary widely across states. The six states prohibiting their expansion would experience no change relative to current law,” the report reads. “However, on average, the states experiencing the full effect of expanded STLD policies would lose an additional 18.6 percent of their nongroup policies, or 2.1 million nongroup insurance enrollees.”