Before 2016, “skimpy” health insurance plans that don’t meet Obamacare requirements for covering people with medical problems or providing comprehensive benefits could be sold for up to a year.
Finding that many healthy people had switched to the so-called short-term health plans because plans complying with the Affordable Care Act were more expensive, the Obama administration issued a rule limiting them to less than three months. The number of enrollees in the plans fell sharply.
Now the Trump administration, citing limited health plan choices and large premium increases under the ACA, is moving to allow carriers to offer the plans for a longer period. A top carrier offering the short-term health plans is health insurance giant UnitedHealth Group Inc.
That will once again revive the ongoing debate over whether it’s better to allow people to buy plans that don’t meet the ACA’s requirements, or whether doing that will cause the market for individual plans that meet the requirements to deteriorate with an increasingly sicker, higher-cost pool of enrollees.
Adding to the fears of ACA supporters is the repeal of penalties for not having qualified coverage under the newly-enacted Tax Cuts and Jobs Act. That reduces incentives for healthy people to keep coverage.
“The primary problem with short-term policies is they are totally underwritten,” Kevin Lucia of Georgetown University’s Center on Health Insurance Reforms (CHIR), told me. Carriers “can discriminate based on health for issue, price, and for benefits.”
The CHIR suggests that states take action to force carriers selling short-term plans to comply with ACA rules.
ACA-required essential health benefits for care such as maternity, prescriptions, and mental health, typically aren’t covered in the short-term plans.
However, Sean Malia, senior director of carrier relations with online health insurance broker eHealth Inc., told me that allowing the sale of short-term plans “provides a more affordable option than ACA plans, as long as consumers understand them.” eHealth sells the non-compliant plans along with ACA-compliant plans.
Individuals buying plans through eHealth.com paid average monthly premiums of $109 for short-term plans from February through October 2017 and families paid average monthly premiums of $264, eHealth reported. In contrast, average monthly premiums for Obamacare-compliant major medical health insurance plans selected by eHealth shoppers were $378 for individuals and $997 for families in 2017, eHealth said.
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