Cheaper Health Plans With Less Coverage Move Forward

The Trump administration, in one of its most significant efforts to roll back the Affordable Care Act, on Wednesday released a rule that will allow for the proliferation of cheaper, less-comprehensive health plans that have been restricted by the former Obama administration.

The rule would loosen restrictions on a type of coverage known as short-term medical insurance—low-cost plans that cover a limited period with less-expansive benefit offerings, which are subject to fewer consumer protection regulations.

Such plans now can only be carried up to 90 days. The new rule would allow the plans to last for a year and be renewed for a total coverage period of 36 months.

The plans are often sold to people who qualify as healthy and may have annual limits on the amount of care the policies will cover. The plans don’t have to cover people with pre-existing conditions, and insurers can charge higher premiums based on a consumer’s health status.

They also don’t have to include the specific benefits mandated by the ACA, such as prescription-drug coverage.

A proposed version of the rule was released in February, and the new action makes the rule final. It goes into effect in 60 days.

Health and Human Services Secretary Alex Azar said the step “will help increase choices for Americans faced with escalating premiums and dwindling options in the individual market.” The plans originally were designed for limited coverage when people were between jobs, for up to 90 days. Now, though dubbed “short-term,” the plans can be extended for a total coverage period of three years.

The administration said the average monthly premium for such a plan has been about $124, less than a third the cost of an unsubsidized plan in the ACA markets.

Democrats and some outside health-care groups, however, characterized the plans as “junk health insurance” that shortchanges consumers, is subject to fraud and falls short of the plans available under the Affordable Care Act.

“By giving the green light to junk plans, Trump and his administration are once again siding with fraudsters, unscrupulous brokers and insurance companies over unsuspecting Americans that simply want affordable health care,” said Sen. Ron Wyden (D., Ore.), the top Democrat on the Senate Finance Committee, which oversees many health-care issues.

Some insurers were also critical. The plans have “the potential to harm consumers, both by making comprehensive coverage more expensive and by leaving some consumers unaware of the risks of these policies,” said Justine Handelman, senior vice president of the Blue Cross Blue Shield Association.

The rule marks the latest in a series of Republican-led efforts to roll back the ACA after GOP lawmakers in Congress failed to repeal it last year. Congressional Republicans ended the ACA’s penalty on people who don’t have health coverage, a change that takes effect next year.

The ACA, also known as Obamacare, sought to make insurance more readily available to people who aren’t covered by a large employer, and to regulate that insurance more tightly.

President Barack Obama and fellow Democrats saw the ACA as a way to guarantee that people with prior health conditions could buy coverage, for example. They also required health plans on the individual market to cover a broad set of benefits, including maternity care and hospitalization, with the goal of protecting consumers from unwittingly buying shoddy products.

But Republicans say these insurance rules have driven up premiums for healthier Americans, especially the roughly seven million people in the individual market who don’t get tax credits that offset premium costs. The ACA also limits the ability of Americans to buy insurance policies that fit their circumstances, critics say.

Health analysts say the short-term plans that would be allowed under the new proposal would likely appeal to healthier customers seeking inexpensive alternatives to ACA plans, while higher-risk consumers would remain in traditional insurance coverage.

That could cause their premiums to rise, because healthier consumers are needed on the ACA’s individual market exchanges to offset costs of older and sicker people, analysts say.

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