The Administration voted on 2-20-18 to allow health insurers to sell lower-cost, less-comprehensive medical plans as an alternative to those required under the ACA program. Insurers would have to make clear that the plans, which could last for less than 12 months, would be liberated from the ACA’s benefit and other mandates. The proposed regulations would:
- Allow insurers to sell individual consumers "short-term" policies that can last up to 12 months, have fewer benefits, and come with lower premiums.
- The plans also would come with a disclaimer that they don’t meet the ACA’s consumer protection requirements, such as guaranteed coverage.
- Insurers could also charge consumers more if an individual’s medical history discloses health problems.
The proposed rule reinstates an option that was killed in 2016 when it stipulated that a plan could last only three months. People bought the plans as an ejection seat from the ACA, and force everyone onto the ACA exchanges. Because of rising premiums, supporters touted the option as a boost for those who needed coverage but didn’t qualify for the ACA’s subsidies and would otherwise face paying the full premium cost.
An Administration fact sheet estimates that in 2016 a short-term plan ran about $124 a month, versus $393 for an unsubsidized ObamaCare plan.
The complaint is that the plans will harm the exchanges by luring the young and healthy away. But millennials are already shunning the exchanges more than the ACA planners imagined. Short-term plans allow insurers price for actuarial risk and trapping the young on exchanges is forcing everyone to pay higher prices. More than 80% of those who selected an ACA plan during open enrollment for 2017, had premiums defrayed by tax credits, according to government data. This money will continue to flow.
The real risk is to taxpayers, as the subsidies increase with premiums, which are rising with or without a short-term option. The proposal comes after a revised plan to repeal and replace the ACA failed last year to pass legislation but did repeal the individual requirement to buy health insurance.
Critics of this approach contend that making such short-term policies more attractive to consumers will undermine the health care law’s insurance markets, because healthy customers will have an incentive to stay away from HealthCare.gov and its state-run counterparts.
The administration’s proposal will be open for public comment for 60 days. However, for 2018, short-term coverage won’t count as qualifying coverage under the ACA health law, meaning consumers with such plans would legally be considered uninsured, putting them at risk of fines.
The repeal of the individual mandate does not take effect until 2019. Opposition to this new plan suggests that the coverage will be “junk” policies.
Source: The AP & WSJ