ibusinesslines.com August 18, 2018

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

04 August 2018, 04:11 | Melissa Porter

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The Trump administration is rolling out a new proposal to expand the use of short-term health insurance plans.

This action overturns an Obama administration directive that limited such plans to 90 days. A short-term plan ran about $124 a month on average in the last quarter of 2016, while an unsubsidized ObamaCare plan averaged $393.

The rule will "help increase choices for Americans faced with escalating premiums and dwindling options in the individual market, said James Parker, a senior adviser to Health and Human Services Secretary Alex Azar".

Buyers take note: Plans will carry a disclaimer that they don't meet the ACA's requirements and safeguards. Major insurer UnitedHealthcare is marketing short-term plans.

The Trump administration's approach is expected to please brokers and the insurers that offer the coverage. According to court filings, this directly violates a clause in the US constitution, which states the president and their administration must "take care that the laws be faithfully executed". The IHC Group is an organization of insurance carriers headquartered in Stamford, Conn.

According to estimates, the administration said short-term plan premiums could be about a third of the cost of comprehensive coverage - about $160 a month or even less. "But, the premiums for those plans will rise as short-term plans cherry pick healthy people".

The new rules will require extensive disclosure to ensure consumers know the limits of short-term policies, HHS officials said. 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.

Prior to the Trump administration's new rule, short-term plans were available for only three months with strict limitations on renewals. All have warned that consumers with bare-bones plans would be stranded when they need care - and that the defection of low-priced customers from ACA marketplaces would drive up prices for those who remain.

Since the administration first proposed an expansion of short-term plans, health policy researchers have been studying the potential effects - and what the existing plans are like.

Ronnell Nolan, CEO of Health Agents of America, says she's happy her clients have a "viable option" now that the penalty for not having an ACA plan is being eliminated.

Factors driving the increase include medical inflation, but the CBO also cited the administration's decision last fall to drop payments to insurers for lowering deductibles for certain low-income policyholders.

The goal was to ensure that everyone has access to quality health coverage without discriminating against those who have pre-existing medical conditions. The tax bill approved a year ago by Congress stops this financial penalty as of 2019.

Short-term plans have been a niche product for people in life transitions: those switching jobs, retiring before Medicare eligibility or aging out of parental coverage.

Federal health officials said that insurers will have to give customers notices, encouraging them to read carefully what the plans do and do not cover. Under the Obama administration, such plans were limited to three months' duration.

Insurers must prominently display in the application and contract that the plan lacks many ACA protections.

Already the vast majority of people who buy ACA coverage through federal or state exchanges qualify for premium subsidies. The move allows small businesses and the self-employed to join together based on their industry or location and purchase health insurance through association health plans. "There are very important benefits that are included in the ACA and are not in short-term" plans. The plans have limits on coverage.

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