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Trump administration finalizes expansion of short-term health plans

04 August 2018

Consumers will have more options to buy cheaper, short-term health insurance under a new Trump administration rule, but there's no guarantee the plans will cover pre-existing conditions or provide benefits like coverage of prescription drugs.

The new rules go into effect in 60 days, so expanded short-term policies could be available in October.

U.S. Sen. Ron Wyden, D-Ore., was quick to react to final approval of the plans, saying they will hurt consumers: "By giving the green light to junk plans, Trump and his administration are once again siding with fraudsters, unscrupulous brokers and insurance companies over unsuspecting Americans that simply want affordable health care".

Larry Levitt, a senior vice president at Kaiser, said the expansion of short-term health plans would help provide some relief for some healthy people - but at the expense of others in the Obamacare markets. "President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans".

In the months since the idea surfaced, it has elicited a wall of opposition from the health insurance industry, hospitals and patient advocacy groups.

The departments of Health and Human Services, Labor and Treasury announced new rules Wednesday that make it easier for consumers to replace ACA insurance with these short-term policies. "This will make a low-priced option like short-term insurance even more attractive, particularly if insurers further adapt their benefits and conditions of coverage to better align with the needs of the unsubsidized population". Both can have bigger price differences between older customers and younger ones. Matt Eyles, president and CEO of America's Health Insurance Plans, said in a prepared statement, "We remain concerned that consumers who rely on short-term plans for an extended time period will face high medical bills when they need care that isn't covered or exceed their coverage limits". These plans are meant as a short-term option for consumers who lack coverage from an employer or are contractors, but experts warn these plans also can deny coverage of existing medical conditions.

The administration estimates that premiums for a short-term plan could be about one-third the cost of comprehensive coverage. In response, Obama-era health officials in 2016 restricted the short-term policies to three months. UnitedHealthcare's Golden Rule Company, which offers short-term plans in North Carolina, imposes a per-person lifetime limit on covered benefits of $250,000 for many of its three-month plans.

Until now, the health-care law had a built-in deterrent for those considering short-term plans.

Klein referenced a "premeditated destruction" of the ACA which has resulted in increased health coverage costs and depressed enrollment.

Already the vast majority of people who buy ACA coverage through federal or state exchanges qualify for premium subsidies. The tax bill approved a year ago by Congress stops this financial penalty as of 2019.

Enrollees who get injured or sick are likely to return to the ACA's guaranteed-issue market at open enrollment and buy a plan that covers their condition, further weakening the ACA market. In June, the administration released final rules on association health plans, which grants greater leeway to small businesses and sole proprietors to join together to purchase insurance that doesn't have to meet all the ACA's requirements, although AHP plans are more robust than short-term plans.

Most exclude benefits for maternity care, preventive care, mental health services or substance abuse treatment.

Just 29% cover prescription drug costs.

"What President Trump is trying to do, is make more affordable options available to people ... and they may be as much as 50% to 80% cheaper than the Obamacare exchange plans".

While most people in the ACA market will be shielded from the increases through federal premium subsides, those middle-class families in the market that do not receive subsides will bear the brunt of the higher costs.

Four states-Massachusetts, New Jersey, New York and Rhode Island-essentially bar sales of short-term plans, while others, including California, Hawaii, Illinois, Maryland and Minnesota, are considering or have passed restrictions on these plans.

Trump administration finalizes expansion of short-term health plans