The Trump administration is taking yet another step that could wind up further undermining individual health insurance plans available in Obamacare’s marketplaces—this time, by green lighting the availability of so-called “short-term” health coverage that doesn’t have to comply with the Affordable Care Act’s (aka the ACA’s) various consumer protections and mandates.
Under the final rule published by the Centers for Medicare & Medicaid Services (CMS) Wednesday, far more individual health policies (i.e., ones that are meant for people who don’t already receive coverage via their employers or public programs like Medicare or Medicaid, as the vast majority of Americans do) that are available on a short term and on a limited basis would be available for purchase. Currently, this kind of coverage is available for a duration of less than three months; the new guidelines would mean that they could last for an initial period of less than 12 months and be renewed for up to about three years beginning this fall.
The Department of Health and Human Services (HHS) painted the decision as one meant to expand consumer choice and lower premiums, since the ACA’s coverage mandates could result in higher premiums for some. “Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle,” said HHS Secretary Alex Azar in a statement. “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
But some health care experts, including the nonpartisan Kaiser Family Foundation think tank’s Larry Levitt, pointed out that the rules may ultimately undermine the landmark health law by creating a “parallel” marketplace resembling the Wild West of individual insurance prior to the ACA’s passage, wherein consumers had few protections and access to far skimpier benefits.
“The short-term plans the Trump administration is expanding can deny coverage to people with pre-existing conditions, do not have to cover the ACA’s essential benefits, and can cap coverage on an annual basis,” wrote Levitt in a tweet. “The Trump administration cannot eliminate the ACA’s insurance rules. Instead, they are using short-term insurance plans to create a parallel market of insurance plans that do not have to follow any of the ACA’s rules,” he continued.
Such a policy could also have considerable downstream effects, especially when coupled with the repeal of Obamacare’s individual insurance mandate passed as part of last year’s GOP tax cut law. Since temporary, skimpy plans would appeal primarily to younger and healthier consumers, Obamacare’s marketplaces would likely be left with a sicker, costlier, and older pool of beneficiaries, consequently raising premiums for that entire pool.
And while lower-income people would mostly be shielded from those consequences since their federal premium subsidies would rise in tandem with their costs, medically needy middle class people who don’t qualify for said tax credits would have to bear the brunt of the increases.
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