Skimpy health insurance plans & pre-existing conditions are back under new Trump rule

Faith Castro
August 6, 2018

Administration officials said that the plans will contain notices urging consumers to read their policies carefully so they are aware of any exclusions or limitations regarding coverage of pre-existing conditions or health benefits, such as hospitalization, preventative care or prescription drugs.

Instead, she's been stuck with surprise bills and mounting costs for services she thought the plan would cover but hasn't.

These plans allow people to insure against the risk of catastrophic illnesses, the kinds that can bring financial ruin to a formerly healthy person, without all the bells and whistles-you won't have to insure for services you are unlikely to use. And because healthy people could be expected to gravitate toward these alternatives, or drop coverage altogether once the mandate's penalties end, ACA marketplaces would be saddled with a greater share of people with health conditions, driving up premiums for ACA health plans by almost one-fifth in 2019.

Short-term plans are not beholden to federal regulations for health payer coverage, HHS noted.

Short-term insurance plans are time-restricted for a reason, according to Sabrina Corlette, a professor at Georgetown University's Health Policy Institute.

Administration officials estimate plan premiums could be half the cost of the more comprehensive ACA insurance.

"Do we just take some junk plan and put up with that?"

The new rules will require extensive disclosure to ensure consumers know the limits of short-term policies, HHS officials said.

Both supporters and critics of short-term plans say consumers who do develop health problems while enrolled could, in theory, hang on until the next open-enrollment period and buy an ACA plan during the sign-up period because the ACA bars insurers from rejecting people with preexisting conditions.

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"If you start out healthy so that you get covered, but then later get a diagnosis, they can drop you at the end of the contract term", says Sabrina Corlette, a research professor at Georgetown University's Center on Health Insurance Reforms. They can be renewed for up to 36 months, though that renewal isn't guaranteed.

The other ways they keep their premiums down is by offering bare-bones coverage in the first place. "This will make a low-priced option like short-term insurance even more attractive, particularly if insurers further adapt their benefits and conditions of coverage to better align with the needs of the unsubsidized population".

The ACA required individual plans sold on and off the marketplace to cover a group of set benefits such as emergency, maternity and mental health care. Next year, there will be no tax penalty for someone who opts for short-term coverage versus a comprehensive plan, so more people might consider the option.

It's unclear how that might happen, since versions of such plans have always been available - including during the Obama administration. Even if that were true, allowing these policies to last for up to three years at a time creates an alternate market to the ACA in which insurers will market heavily to young and healthy enrollees, dupe them into buying bare-bones coverage with lower premiums, and ultimately make premiums for full-benefits, comprehensive coverage more expensive for the older and sicker enrollees who remain in ACA-compliant market.

"It is not a silver bullet, but the rates are less", says Nolan, a Louisiana insurance broker. Major insurer UnitedHealthcare is marketing short-term plans.

The expanded plans will be able to go on sale in two months, or as long as it takes for state regulators to approve them.

A federal analysis accompanying the new rules estimates that 600,000 extra people will buy such plans next year, increasing to 1.6 million within four years. This will make short-term health plans easier and more affordable for patients to access, HHS says. "These policies are not qualified health plans", Parker said, referring to insurance that meetings ACA standards.

Enrolment for the law's subsidized private insurance is fairly stable, and HealthCare.gov insurers are making money again.

The move "will significantly increase 2019 premiums for millions of individuals and small-business owners and could result in far fewer health plan choices", Blue Cross Blue Shield Association president Scott Serota said in a statement.

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