On Tuesday the Trump administration released a proposed rule that could make short-term health insurance plans more attractive to consumers by extending their duration for up to a year. But opponents are concerned the change could destabilize the insurance marketplaces set up under the Affordable Care Act, also known as Obamacare.
Short-term insurance plans had been limited to three months, but the proposal would extend that to up to a year. The short-term plans were meant for people who were changing jobs, moving, or otherwise found themselves without insurance coverage and outside of an enrollment period.
The plans are typically less expensive than coverage offered on exchanges set up by the Affordable Care Act because they do not have to cover the same types of guaranteed benefits and coverage. The plans were capped at 90 days to make them less appealing to people who would otherwise purchase coverage on the exchange.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” said federal Health and Human Services Secretary Alex Azar. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump Administration is taking action so individuals and families have access to quality, affordable health care that works for them.”
The proposed rule is part of an executive order President Donald Trump signed in October, saying he wanted to provide more options to consumers.
Jay Angoff, the first director of Affordable Care Act implementation in the Obama administration and a former insurance commissioner in Missouri and New Jersey, sent out a statement Tuesday criticizing the proposal.
“These substandard insurance policies would not cover pre-existing conditions and would take healthy people out the Affordable Care Act-compliant market, further destabilizing it. This is an unabashed attempt to roll back the progress made by the terms of the ACA,” the email read.
John Doran, with Blue Cross and Blue Shield of Montana, said the insurer is still analyzing the proposed rule and will participate in the rulemaking process.
The proposal "has the potential to do two things,” Doran said. “We have to look at both sides of the spectrum. … It could expand access. For some people, it could make access (to health insurance) more affordable. But you also have to be concerned about what it does to the overall marketplace, does it further stabilize the market or not?”
On one end, Doran said, the expansion of short-term policies, which do not have to cover the 10 essential health benefits required for plans under the Affordable Care Act, could provide more choice for Montanans.
The 10 essential benefits include things such as mental health, maternity and newborn care coverage.
“Some folks might not need all 10 of those essential health benefits,” Doran said. “They might need only a smaller benefit structure and this would provide them a lower-cost alternative to the Affordable Care Act Plans. If you’re a healthy person and you don’t need the suite of essential health benefits, the expansion of these at-one-time-short-term policies into a full year could provide you more choice at a lower cost.
On the flip side, Doran said, the proposed rule also has the potential to create unrest in the individual marketplace because it would mean one product with far less requirements and regulations competing against a very heavily regulated product.
“When you enter one unregulated product versus a regulated product, that has the chance to further destabilize the marketplace,” Doran said.
Doran didn’t immediately have available how many people in Montana have short-term plans through Blue Cross, but said they’re not as prominent as they once were because most consumers would qualify for a special enrollment option if they lose coverage because of a move or a new job.
Karen Early, with Montana Health Co-op, said that she doesn’t expect a huge change if the proposed rule is enacted.
“Some folks that might otherwise not have insurance could get some," she said Tuesday. "I doubt it would have much effect in Montana.”
“If more people have insurance, that’s good,” Early said.
Doran said there’s also always a concern over the health care literacy of consumers, who may not understand that the cheaper plans do not include the same coverage as other ones sold on the exchange.
“Right now in Montana and across the country there’s not a deep understanding of health insurance to begin with," Doran said. "If we enter into the marketplace health care plans that could be confusing or that consumers might think have more coverage than they do, that could be problematic.”
Matt Rosendale, state auditor and commissioner of securities and insurance, has advocated for health insurance literacy since taking office and would continue that effort if the proposed rule were to take effect, spokesman Kyle Schmauch said Tuesday.
“Matt favors opening up options to consumers, but people need to be informed, prior to purchasing, fully what they're getting — making sure people are fully informed with what products are out there, making sure they are in compliance with Montana statutes, making sure insurance companies are forthright in what is covered, what the benefits are," Schmauch said.
Rosendale supports expanding the options for health insurance “outside the scope of Obamacare regulations,” Schmauch said.
Schmauch said Rosendale isn't concerned that the proposed rule would destabilize the marketplace because he believes people who would purchase the short-term plans aren’t getting covered now.
“We’re already seeing that happen because of the high cost of Obamacare plans for people who are not subsidized,” he said. And after a change in the tax bill signed at the end last year that removed tax penalties for people who did not have insurance, Schmauch said those people who would leave the marketplace would forgo coverage altogether without a cheaper option.