Short-term health plans with a history of consumer complaints will get a larger role in the U.S. insurance market under a Trump administration plan to expand alternatives to Obamacare.
The temporary plans, which were originally intended for people between jobs, are allowed to offer coverage that’s far skimpier than what the Affordable Care Act requires. The administration has promoted them as a cheaper alternative to Obamacare for individuals who have seen their premiums climb or lost access to doctors. The plans were limited to three months, and President Donald Trump is making them available for longer.
“This is a really important new option for millions of Americans,’’ Alex Azar, secretary of the Health and Human Services Department, said in an interview on Bloomberg TV Wednesday. The plans will be less expensive, he said, but “they may not be right for everybody.”
The rule released on Wednesday makes the short-term plans available for a duration of up to a year, and insurers can make the plans renewable for as long as three years. Under the rule, insurers are required to warn their customers that the policies may not cover pre-existing conditions and may offer limited benefits.
Obamacare Alternative
Loosening limits on short-term health plans is just one of several ways the Trump administration is pushing to weaken Obamacare. The health law’s requirement that Americans buy comprehensive insurance coverage was repealed as part of the December tax cuts, which helped open the door for a bigger role for the short-term plans.
About 160,600 people were covered by short-term health insurance plans at the end of 2016, according to data from state regulators. The Centers for Medicare and Medicaid Services has estimated that an additional 1.6 million people may sign up for the plans once they become more widely available.
Short-term coverage for an individual cost approximately $124 a month in late 2016, compared with about $400 a month for Obamacare, according to the Centers for Medicare & Medicaid Services.
Fine Print
For some people, though, the cheaper premiums can come at a cost, such as when insurers claim that a cancer treatment shouldn’t be covered because a patient had the disease before buying coverage, as Bloomberg reported in October. The plans are effectively banned in New York, New Jersey and Massachusetts, and several other states impose restrictions on them.
State regulators told the administration that they’ve received complaints from consumers about the plans failing to cover their treatments. Pennsylvania’s insurance regulator said some consumers complained about services that weren’t covered, based on fine print in plan policies.
“There are many lawsuits and consumer complaints around the country stemming from unpaid bills” resulting from the short-term plans, Richard Besser, president of the Robert Wood Johnson Foundation, the biggest U.S. health philanthropy, said in a letter to the administration opposing the expansion of the plans.