The Trump administration has proposed allowing people to obtain short-term health insurance for as long as 12 months, reversing an Obama administration-era rule that put a shorter limit on how long these plans can be used.
The move overturns an Obama administration-era rule implemented in April 2016 that restricted the time people were allowed to be on these plans to three months. Prior to that, people were able to have them for nearly a year.
The plans are generally meant to be transitional coverage that people use in circumstances such as being between jobs or taking a semester off school. The short-term plans are less expensive than most of the plans offered on the Obamacare exchanges, particularly when customers do not qualify for federal subsidies that cap the amount they pay in premiums.
They also, however, do not offer the same consumer protections under Obamacare that cover a more extensive range of medical care, and do not have to be provided to people with pre-existing illnesses. Insurers could choose to omit coverage for diabetes, cancer treatment or substance abuse treatment, or could charge people more who have some of these conditions.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” Health and Human Services Secretary Alex Azar said in a statement. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump administration is taking action so individuals and families have access to quality, affordable healthcare that works for them.”
The proposal will undergo a 60-day public comment period, and input will then be reviewed by health officials. Seema Verma, administrator for the Centers for Medicare and Medicaid Services, said in a phone call with reporters the administration would then “work very swiftly” to put out the final rule. One particular aspect officials are seeking input on is how people might renew their coverage once they reach the one-year mark.
The latest proposal comes as a result of President Trump signing an executive order directing federal agencies to consider how the rules can be changed. Another proposal would allow more individuals and small businesses to band together to form associations for the purpose of obtaining health insurance.
When Trump announced his intention in October to allow his administration to make the changes, he referred to it as a move to “repeal and replace” Obamacare and indicated he needed to act because the Republican-controlled Congress had failed to come to an agreement on healthcare legislation.
Critics of extending access to the plans worry that customers will not understand how little they cover and that healthier people will be siphoned out of the Obamacare exchanges, destabilizing the market by leaving a disproportionately sicker population in the exchange and once again driving up prices.
“These proposed short-term plans would actually be long-term scams,” said Brad Woodhouse, campaign director for the pro-Obamacare group Protect Our Care. “The Trump Administration wants to let insurance companies sell skimpy plans to unwitting Americans and then leave them holding the bill if they get sick or hurt.”
CMS officials stressed that under the proposal health insurance companies would need to prominently display the fact that the plans do not fulfill the same requirements as Obamacare.
Verma acknowledged the plans had limitations but said officials wanted to give people more options about what health insurance might fit their needs.
About 148,100 people used short-term plans in 2015, but that was before the cost of health insurance sold on the exchanges began to increase more steeply. Ahead of 2017, premiums for mid-level plans rose by an average of 22 percent nationwide.
Insurers have said that the increases are a result of uncertainty over how the Trump administration or Congress would change Obamacare, but also from incurring losses from selling the plans, which younger, healthier and cheaper enrollees haven’t been using as much as some hoped. For 2018, the premiums for mid-level plans rose by an average rate of 34 percent.
Officials estimate that 150,000 to 200,000 people would leave the exchanges to join short-term plans, and said they also expected that some of the 28 million who are currently uninsured might seek the short-term option. Verma said officials expected “virtually no impact” on premiums for people in the exchanges.
People who don’t receive federal help paying for their premiums because of how Obamacare is structured, meaning people who make more than $48,240 for an individual or $98,400 for a family of four, and who do not have a pre-existing illness, may turn to the short-term option. The number of people who have unsubsidized health insurance is pegged at anywhere from 6 to 9 million people.
Verma said that having the short-term offering “could be the difference between someone getting coverage or going without coverage at all.”
Azar said during a meeting with reporters mid-morning the administration would look for other ways to make health insurance more affordable and accessible to people.
“It’s about choice. It’s about options for more individuals. That’s the intent behind this,” he said.
“If it’s the right choice for those people then we want to make it available,” he continued. “Obviously we’ve got more work to do. This is not the end of our work in this space, of trying to help make insurance affordable and individualized for people.”
