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Short-term health plans skirting ACA-required benefits and protections to be expanded

Health and Human Services Secretary Alex Azar testifies on Capitol Hill on Feb. 14 about the department’s fiscal 2019 budget. (Jacquelyn Martin/AP)

The Trump administration is proposing to significantly broaden Americans’ ability to rely on short-term health plans that do not comply with the Affordable Care Act’s benefits requirements and consumer protections.

Health and Human Services Secretary Alex Azar announced Tuesday morning that a rewrite of federal rules would extend the time consumers can hold such health plans from three months to 12 months.

The plans were intended until now to be a brief gap-filler for people between jobs or for college students taking a semester off. The administration is attempting to redefine them as part of its strategy to help consumers bypass the Affordable Care Act marketplaces, which President Trump and his aides characterize as expensive failures.

“It’s one step in the direction of providing Americans with health insurance options that are both more affordable and more individualized for families’ circumstances,” Azar said in a conference call with reporters to announce the proposed rule.

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, echoed that portrayal of the rewrite as health reform. “While in the past these plans have been a bridge, now they can be a lifeline,” she said.

The proposed rule is the second that officials have designed since October, when Trump issued an executive order intended to widen the availability of health plans that skirt important Affordable Care Act insurance provisions.

The order is part of the administration’s strategy to circumvent parts of the sprawling 2010 health-care law — President Barack Obama’s primary domestic legacy — through executive actions. The moves are an alternate route given the Republican-led Congress’s failure last year to dismantle much of the law — although Trump is still urging lawmakers to try again, despite GOP Senate leaders’ reluctance.

In this case, the idea is to make it easier for individuals and small businesses to buy alternative types of coverage with lower prices, fewer benefits and weaker government protections.

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If the rule is finalized, consumers would be able to buy — for just under a year at a time — short-term plans that do not have to include the Affordable Care Act’s 10 required health benefits and that can deny coverage or charge more to some customers who are in poor health.

The health officials played down criticism Tuesday by some consumer advocates that the short-term plans will drain healthy people from the Affordable Care Act marketplaces. Verma predicted that “only a very small number” of customers will defect from the federal insurance exchange or similar ones run by states.

Government actuaries predict that the number is likely to be 100,000 to 200,000, said Verma, who added that “the shift will have virtually no impact” on insurance premiums in Affordable Care Act marketplaces. The main people who will buy short-term plans, officials predicted, are some of the 28 million Americans who are uninsured — “the forgotten men and women of the Affordable Care Act,” Azar termed them Tuesday while meeting with reporters for the first time since he was sworn in three weeks ago.

At the moment, federal law does not allow these limited-duration plans to be renewed. But Verma said the administration is asking for suggestions on how the government might start permitting renewal.

Because their coverage can be skimpier than that offered by Affordable Care Act health plans, which are intended for people who cannot get affordable health benefits through a job, short-term plans do not count toward the law’s requirement that most Americans carry health coverage. Verma said that people who buy the limited plans could face federal penalties this year for violating the mandate. But that danger will disappear next year, when enforcement of the mandate will end, under an important element of the massive tax law Congress adopted late last year.

Insurers selling short-term plans would need to include on applications and plan documents clear statements that the coverage does not meet Affordable Care Act requirements.

Azar and Verma did not say when they expect such plans to be available for sale. After a public comment period ends in 60 days, officials will put the rule in final form — perhaps by this spring, Azar said.

Just after New Year’s, the Labor Department took the first step under the president’s order, proposing a regulation to widen access to a form of coverage known as association health plans that have long been praised by conservatives. The rule, still in draft form during its comment period, would reclassify such plans so that they no longer have to include the essential health benefits — including maternity care, prescription drugs and mental health services — that the Affordable Care Act requires of insurance sold to individuals and small businesses. It also would, for the first time, allow individuals to buy them.

Trump administration proposes rules for health plans without certain ACA protections

America’s Health Insurance Plans, an industry trade group, said in a statement Tuesday that “we remain concerned that expanded use of short-term policies could further fragment the individual market, which would lead to higher premiums for many consumers, particularly those with preexisting conditions.”

On Capitol Hill, House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) and the head of the panel’s health subcommittee, Rep. Michael C. Burgess (R-Tex.), praised the HHS proposal as “another important step taken by the administration to expand consumer choice, competition and access to health care.”

But the committee’s ranking Democrat, Rep. Frank Pallone Jr. (N.J.), and his counterparts on the Ways and Means Committee, Rep. Richard E. Neal (Mass.), and Education Committee, Rep. Robert C. “Bobby” Scott (Va.), derided the draft rule, contending that “widespread marketing of these bare bones, junk plans will further destabilize health insurance markets, and will lead to higher premiums for everyone.”

Tom Shores, an insurance agent for 25 years in Boise, Idaho, said he favors affordable alternatives to Affordable Care Act coverage but has noticed that alternatives tend to be more expensive as they become more popular. In Idaho, he said, some insurers have found ways to sell short-term plans for 10 months instead of the federal limit of three months.

“But because so many people are doing that, the cost of the short-term plans are up,” Shores said. “They are not that much of an advantage over the plans in the exchange.”

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