People will once again be able to buy health insurance coverage for long periods of time that offers less — but also costs less — under a new rule finalized Wednesday by the Trump administration.
The decision sparked a new wave of reaction in Washington and in Georgia. Advocates of the Affordable Care Act called it the return of “junk insurance,” with policyholders who think they’re well covered but learn too late they’re not. Opponents said the administration had delivered on a promise to restore consumer choice.
Georgia consumers faced with a sixth year of sky-high premiums and grinding political arguments over Obamacare voiced their own satisfaction or anxiety. A spokesman for the state Department of Insurance said that theoretically the new plans could be available to Georgians in 2019, depending on how fast companies develop them and get them approved.
In announcing the rule, U.S. Health and Human Services Secretary Alex Azar said in a statement that “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans.”
He continued, “these plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
The ACA, also known as Obamacare, didn't just create an exchange market for low-income people; it also imposed rules on the entire U.S. insurance market. The Trump administration's rule is an attempt to get around the fundamental effort of the ACA to make sure virtually all Americans have robust health insurance. The law had a number of small loopholes; one allowed "short-term" plans that offered less coverage but filled a temporary gap.
Under President Barack Obama, short-term plans were allowed to last up to three months.
The Trump administration on Wednesday said they could last up to three years. That is longer than the entire time the average American age 25 to 35 stays with an employer, according to the Bureau of Labor Statistics. An initial plan could last up to one year, and the insurer could choose to renew it twice.
Such plans do not have to cover pre-existing conditions. They may have no cap on a policyholder’s out-of-pocket costs, but they may well cap the insurer’s contributions. According to the Kaiser Family Foundation, typical short-term policies do not cover maternity care, prescription drugs, mental health care and preventive care. They also lack other benefits, and they may limit coverage in other ways. Consumer advocates such as Georgians for a Healthy Future say the “skimpy” coverage “leaves consumers’ health and finances exposed.”
Bill Whyte, a Buford businessman who distributes consumer goods, welcomed the news. He bridles at the term “skimpy.” He has company insurance, but he’s tired of his taxpayer dollars being on the hook for Obamacare market gaps. And just as a basic principle, he thinks consumers should be able to choose what they need.
“When did maternity care become a fundamental benefit? Or mental health care?” Whyte asked. “I’d say those are specific items consumers should be able to choose from.”
“We’re a very large, diverse country, why do we think everyone needs the same thing?” he added.
The administration estimated that 100,000 to 200,000 people could shift from ACA-compliant insurance to a short-term policy. They conceded that younger, healthier people may be more likely to sign up.
That could siphon the most lucrative customers out of the market, creating more instability. Despite the opportunity to market a new product, insurance companies weren’t thrilled.
“The broader availability and longer duration of slimmed-down policies that do not provide comprehensive coverage has the potential to harm consumers,” Justine Handelman, a senior vice president with the Blue Cross Blue Shield Association, said in a statement, “both by making comprehensive coverage more expensive and by leaving some consumers unaware of the risks of these policies.”
“We remain concerned that consumers who rely on short-term plans for an extended time period will face high medical bills when they need care that isn’t covered or exceed their coverage limits,” the insurance industry group America’s Health Insurance Plans said in a statement.
For Nema Etheridge, those risks just cause anxiety. With the rule, she faces another agonizing choice.
While Obamacare coverage can be quite affordable with subsidies for those just above the poverty level, those who don’t receive subsidies, such as Etheridge, face massive premiums.
Etheridge, a coffee store manager in Americus, gave up her insurance last year and went with an “association plan” where group members agree to cover each other with what they hope is fairly robust coverage. But they have no legal obligation to pay and sometimes can’t. Will Etheridge go for a short-term plan now?
“I mean, it sounds like basically what it’ll do is make premiums more affordable for less insurance. You know, I don’t know,” she said. “But it just continues to water down the whole system.”
HEALTH INSURANCE CHANGES
Under a new rule finalized by the Trump administration on Wednesday, “short-term” plans that skirt Obamacare coverage mandates can now last up to three years.
PRO
- The plans are much less expensive, with premiums costing perhaps one-third less.
- Someone who doesn't think he or she needs full insurance can buy a plan offering less coverage.
- The change offers individual consumers more choice.
CON
- The plans may not cover pre-existing health conditions or the "essential health benefits" listed in the law such as medicine costs and mental health care.
- The plans may cap how much they pay out and may not cap how much the policyholder shares in out-of-pocket costs.
- When some short-term policyholders find themselves with health problems that they didn't cover, unpaid bills will likely fall on health care providers and the public.
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