The Trump administration’s proposal to build up short-term health insurance plans as a "lifeline" for people who can’t afford Affordable Care Act coverage could split the insurance market in two, siphoning young, healthy people into cheaper, more minimal plans — while those who remain in ACA plans face premiums that spiral upward even faster.
The comment period ends Monday on a Centers for Medicare and Medicaid Services proposal to extend short-term plans to 364 days, from the current three-month limit.
The effects of that policy change, combined with zeroing out the individual mandate's financial penalty in 2019 will be harmful to the most vulnerable patients, according to more than 100 patient groups and many health policy wonks. Supporters of the policy say those fears are overblown, and argue that the expanded plans offer needed options for people who are uninsured.
Short-term plans are not required to provide comprehensive coverage of medical needs and can exclude people with preexisting conditions. Some health policy experts say they fear the expansion of these skimpy plans will encourage healthy people to abandon the ACA-compliant markets, which would raise prices for those who remain. Middle-class people who make too much money to qualify for generous federal subsidies that defray the cost of monthly premiums would be hit hardest by those price increases.
The Urban Institute projects that 4.3 million people will join short-term plans in 2019 — about half of them by abandoning the ACA-compliant plans, which would see premiums increase 18 percent on average. An analysis by the Wakely Consulting Group commissioned by the Association for Community Affiliated Plans predicted that 1 million to 1.9 million people could shift from ACA plans to short-term plans in the near term.
The Trump administration predicts only 100,000 to 200,000 people will be tempted out of the ACA market into short-term plans. The proposed rule projects the federal government would pay more than $96 million more in premium tax credits to shelter lower-income people from premium increases.
Brokers who sell such plans expect a significant increase in interest if policy changes are made. UnitedHealth Group sells short-term limited-duration plans already, and Aetna chief executive Mark Bertolini indicated last year that his company was interested in the space.
“I don't know that we'll see a flood, but we'll definitely see more carriers — and have already started receiving some calls from carriers that they plan to get back in the marketplace if the rules change the way they expect it to,” said Sean Malia, senior director of carrier relations at eHealth. The broker sold 93,000 short-term plans last year and has found in surveys that about half of the people turning to them had tried to find ACA coverage first.
Bruce Telkamp, chief executive of AgileHealthInsurance, another online broker, said that he expects a surge of enrollment in short-term plans over the next 18 months, but argues that those are people who would go uninsured otherwise.
“I don't think the trade off, for the vast majority, is short-term vs. ACA; rather, it's ACA vs. uninsured, and uninsured vs. short-term,” Telkamp said. “It's not designed to be long-term health insurance.”
America's Health Insurance Plans, a major lobbying group for insurers, called for the short-term plans to be limited to six months. AHIP chief operating officer Matthew Eyles warned that expanding them as proposed "will negatively impact conditions in the individual health insurance market... exacerbating problems with access to affordable comprehensive coverage for all individual market consumers," in a letter to Health and Human Services Secretary Alex Azar.
The Alliance of Community Health Plans said in its comments that the proposed rule could “cause more insurers to flee the market, leaving consumers with fewer options.”
Health policy specialists said that it's completely understandable why people might find short-term plans attractive, particularly those who don't qualify for government subsidies. But they aren't sure consumers will understand the long list of exclusions that typically come with such plans, ranging from injuries during mountain climbing to maternity care.
“These short-term policy brochures read like an obstacle course of exclusions,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “I think brokers are going to be selling these policies, pushing these policies very hard next year.”
Joseph Antos, a resident scholar at the American Enterprise Institute, suggested the projections of people leaving the ACA market could be unreliable — much like the initial predictions of how many people would sign up for ACA insurance in the first place.
“I think it's not as bad as either side would like it to be,” he said. “This is a limited market; these plans were always intended to be bridge plans from one state of life to another state of life, and I think they're going to remain that way.”
That is different from the Trump administration's portrayal of the possibilities these plans hold. At a news conference in February, CMS administrator Verma said, “While in the past these plans have been a bridge, now they can be a lifeline.”