WASHINGTON — The Trump administration Tuesday cleared the way for a lower-cost, limited alternative to the comprehensive individual medical plans required under former President Barack Obama’s health law.
Proposed regulations from the administration would allow health insurers to sell individual consumers so-called “short-term” policies that can last up to 12 months, have fewer benefits, and lower premiums.
The plans would come with a disclaimer that they don’t meet the Affordable Care Act’s consumer protections, such as guaranteed coverage, or the requirement to offer robust benefits. Insurers could also charge consumers more if an individual’s medical history discloses health problems.
Nonetheless, administration officials said they believe the short-term coverage option will be welcomed by people who need individual coverage but don’t qualify for the ACA’s income-based subsidies and face paying the full cost of their premiums.
“We need to be opening up more affordable alternatives,” Health and Human Services Secretary Alex Azar told reporters. “It’s one step in the direction of providing Americans with alternatives that are both more affordable and more suited to individual and family circumstances.”
Critics of Trump’s approach say that making such short-term policies more attractive to consumers will undermine the health care law’s insurance markets. That’s because healthy customers will have an incentive to stay away from HealthCare.gov and its state-run counterparts.
Democrats say the solution is to increase government subsidies, so that more middle-class people will be eligible for taxpayer assistance to buy comprehensive coverage. Under Obama, short-term plans were limited to periods of no longer than three months.
Trump administration officials reject the notion that they’re trying to undermine the ACA. Instead, they say they are trying to make things more workable for people who are not being helped by the health law.
The administration estimates that only about 100,000 to 200,000 people will drop coverage they now have under the ACA and switch to cheaper short-term policies. They also say they expect short-term plans could attract many people among the estimated 28 million who remain uninsured.
“What we see right now is that there are healthy people sitting on the sidelines without coverage, and this is an opportunity to provide them with coverage,” said Seema Verma, head of the Centers for Medicare and Medicaid Services, which also administers the Obama-era health law.
One major health insurance company, United Healthcare, is already positioning itself to market short-term plans. But others in the industry see them as a niche product for people in life transitions, like being in-between jobs, moving to another state, or retiring before Medicare kicks in. Consumer advocates say patients have to read the fine print carefully to make sure the plan will cover their medical bills.
The administration’s proposal will be open for public comment for 60 days, and Verma said she hopes the new rules will be finalized as soon as possible. However, for 2018, short-term coverage won’t count as qualifying coverage under the Obama health law, which means consumers with such plans would legally be considered uninsured, putting them at risk of fines. The requirement that most Americans have coverage has been repealed, effective next year.
The proposal to expand short-term plans follows another administration regulation that would allow groups within an industry to offer “association” health plans also exempt from ACA requirements.
Administration officials said there’s no final decision on whether consumers will have a legal right to renew coverage under one of the new short-term plans.
Tuesday’s proposal was a joint effort of the departments of Health and Human Services, Labor and Treasury. It doesn’t affect people with job-based plans, which cover the majority of workers and their families.