A wide array of doctor, insurer, and other major healthcare groups pleaded with the Trump administration to nix plans to expand short-term insurance plans.
But outside conservative groups said the plans are a needed escape hatch from Obamacare.
Healthcare groups say in comments to the proposed regulation, which were due Monday, the plans are no better than “junk insurance” that erode patient protections. The regulation would expand the duration of the short-term plans from 90 days to nearly 12 months.
Short-term plans do not have to abide by the same requirements as plans sold on Obamacare’s exchanges . These include covering essential health benefits and not charging sick people more money.
Bypassing such patient protections is exactly what healthcare groups are worried about.
The top doctor’s group in Washington, the American Medical Association, said in comments the proposed rule would result in “substandard, inadequate health insurance coverage.”
The group was worried that the proposed rule could destabilize Obamacare’s insurance exchanges, which are on the individual market used by people who don’t get insurance through their job. The AMA worries the rule could cause healthy people to flee the exchanges and leave only more expensive sicker people, thus creating a death spiral that would collapse the marketplaces.
Other groups were concerned about protections for people with pre-existing conditions. Unlike Obamacare plans, short-term plans can charge sicker patients more money or deny them coverage.
“We are very concerned about policies that would expand access to [short-term] policies because these products are exempt from important consumer protections, such as prohibitions on lifetime and annual dollar limits, limits on the issue of pre-existing condition exclusions and the prohibition on medical underwriting,” said Cancer Action Network, the American Cancer Society’s advocacy arm.
America’s Health Insurance Plans, the leading insurance lobby in Washington, commented the rule could result in more people being uninsured or underinsured.
“We urge the administration to limit the duration of short-term plans to six months, ensure clear disclosures to consumers about what short-term plans do and do not cover, and inform consumers of the potential availability of discounted coverage through the marketplace,” according to incoming AHIP President Matt Eyles.
A collection of 21 patient groups, including the AMA and the Cancer Society, sent a letter Monday to Trump administration officials demanding to pull the rule.
The letter outlined multiple concerns with the rule, including that the short-term plans can install lifetime and annual caps on medical claims. Obamacare plans are prohibited from installing these caps.
“This proposal would once again subject patients to significant financial insecurity due to medical needs,” according to the letter.
Another area of concern is that short-term plans don’t have to comply with a little-known “80-20” rule. For an Obamacare plan, an insurer must spend 80 percent of every premium dollar on healthcare and the remaining 20 percent on administrative costs and overhead.
“Absent this requirement for [short-term] products, insurers choosing to issue them will be more likely to spend more resources on marketing short-term products and offering higher commissions to their brokers compared to comprehensive [Affordable Care Act]-compliant plans,” the letter said.
Other groups that signed the letter include the National Alliance on Mental Illness, American Heart Association, March of Dimes, American Lung Association, and the National Organization for Rare Disorders.
But proponents of the rule said that it is integral to giving affordable options for people on Obamacare stuck paying double-digit premiums.
“These plans offer much-needed choice to the hundreds of thousands of Americans who continue to feel trapped between paying skyrocketing costs and dropping health insurance coverage altogether,” said Nathan Nascimento, executive vice president of the Koch Brothers-backed Freedom Partners.
Other Koch-backed groups Americans for Prosperity, Generation Opportunity, and LIBRE Initiative filed comments in favor of the proposed rule alongside Freedom Partners.
“Short-Term, limited-duration insurance plans fill an essential hole in the healthcare market created by the restrictions and barriers of Obamacare,” said Brent Gardner, Americans for Prosperity’s chief government affairs officer, in a statement. “These plans not only provide more options for consumers in the healthcare market, but they are already significantly reducing costs.”
