Potential pros, cons of those short-term health plans


As promised, the Trump administration has released a proposed rule to allow short-term health insurance plans that do not conform to all of the Affordable Care Act’s requirements. The Department of Health and Human Services says it’s necessary to give consumers access to more affordable insurance options; many backers of the ACA say it will further undermine already wobbly ACA markets and leave people with inadequate protections in the case of a serious, costly health problem.

So what is a “short-term plan?”

Before the ACA, they were designed to fill in gaps when people don’t have access to insurance – for instance, between jobs. Once the ACA broadened access to coverage, the Obama administration limited them to just under three months – the amount of time someone could be uninsured or underinsured without incurring an individual mandate penalty.

The plans do not have to cover all the benefits in the ACA – it is not unusual for them to exclude mental health and maternity care, for instance. In addition Reed Abelson of The New York Times wrote a piece a few months ago analyzing how these plans can reject people with pre-existing conditions — and sometimes refuse to cover expensive conditions that emerge by retroactively claiming that they were pre-existing conditions (even if they hadn’t been diagnosed or caused symptoms).

But with premiums rising for people who don’t get subsidies, and with the individual mandate going away, more people may turn to these plans. The Centers for Medicare &
Medicaid Services estimates that 100,000 to 200,000 people who are on the exchanges would switch (mostly people who don’t get subsidies). CMS expects most of the customers to be drawn from the population that is uninsured, or buying off exchange.

This is a proposed rule – it may go through changes. One aspect still under review is whether the yearlong plans could be renewed – meaning they aren’t really “short-term” plans anymore. States can choose whether to allow them; it’s too soon to know how that will play out.

To read more:

Here’s the administration’s news release on the proposed rule and here is a CMS fact sheet.

Kaiser Family Foundation has an issue brief on them: Read it here. The Commonwealth Fund has one too, read that here.

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