Long-Term Sales of ‘Skinny’ Health Plans Contemplated

The Trump administration is hinting that it may let “skinny” health plans to be sold for longer terms than has been allowed for about the past 20 years.

If that becomes reality, could that be a virtual return to pre-Obamacare days when health insurers could refuse to sell individual market plans to people with pre-existing conditions (or charge very high rates if they did)?

A proposed rule issued by the Department of Health and Human Services would allow short-term health plans to be sold for 364 days, which was allowed before the Obama administration shortened the terms to less than three months in a 2016 rule.

The short-term plans don’t comply with Affordable Care Act requirements to cover a comprehensive set of essential health benefits, among other things. They are billed as being primarily for people between jobs who can’t afford more comprehensive coverage.

But the HHS requests comments on whether the plans should be allowed to continue for 12 months or longer “with the issuer’s consent.”

Costs for ACA plans have escalated sharply over the past several years, and people who make too much money to qualify for ACA subsidies are dropping out of the individual market, according to the HHS’s analysis in the proposed rule.

The short-term plans are a small part of the individual market, covering about 160,000 people in 2016 out of 13.6 million people in the individual market, according to state insurance commissioners. UnitedHealth Group Inc. is one of the top sellers of the plans.

In the short term, the proposed rule would likely accomplish its goal of providing more choices, Chris Sloan, senior manager with Washington-based health policy consulting firm Avalere Health, told me.

But, “over the long term these could start to be pitched more like individual market policies” prior to the 2014 implementation of ACA rules, he said. “As we see how plans and states react to this, you could potentially see the growth of the short-term policy market.”

Moreover, “Removing the requirement to reapply or buy a different plan could boost re-enrollment in these short-term plans over the long term,” Sloan said.

The open question is how much the short-term market will pull healthy people out of the ACA-compliant market. The Urban Institute, which supports the ACA, estimates that expanding short-term policies would increase the number of people without ACA-qualified coverage by 2.5 million in 2019. But it also found if the rules on short-term plans are loosened, 1.7 million of the people buying short-term policies would have been uninsured.

Read my full article here.

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