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Short-term health plans allowed by Trump come with a major caveat

The Trump administration took another step toward eliminating the Affordable Care Act by changing rules that will allow consumers to buy cheaper, shorter-term health insurance and for longer. But insurers would not have to cover pre-existing conditions or offer the same benefits as required by law. Lisa Desjardins learns more from Julie Appleby from Kaiser Health News.

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  • Judy Woodruff:

    Today, the Trump administration took another step toward eliminating Obamacare by changing rules that will allow consumers to buy cheaper, shorter-term health insurance.

    But, as Lisa Desjardins explains, there are concerns that this move, set to take place this fall, may be harmful for people with health problems and possibly left without enough health care coverage.

  • Lisa Desjardins:

    The president says there needs to be more affordable insurance options than what's available through the Obamacare marketplaces now.

    The short-term plans will likely offer much lower premiums, but insurers wouldn't have to cover preexisting conditions or offer the same benefits as required by the Affordable Care Act. Currently, people can only use short-term coverage for three months. But the new rules would allow people to keep those plans for a year and potentially renew them for a total of three years.

    Julie Appleby covers this for Kaiser Health News and joins me now.

    Julie Appleby, let me just start off right away. While the Trump administration says these are good options for people, cheaper, opponents say they're skimpy and risky. Just explain what these plans are. What do they do?

  • Julie Appleby:

    Well, these are short-term plans that are meant to be sort of a stopgap between — maybe you have lost your job or you're between jobs. You need some coverage for a little while. So they're meant to be a stopgap.

    They have been around for a long time. They are, currently, as you mentioned, available only up to 90 days. So you have to renew them every few months.

    The Trump administration is changing the rules on that to make them available for up to a year. But what they are, basically, they have some similarities to what we're used to as job-based insurance, for example, but there are some major differences.

    They're less expensive. And the reason they're less expensive is because they cover a lot less. They can be choosy about who they pick. So if you are sick or have some kind of preexisting condition, you might not even be able to buy one of these plans.

  • Lisa Desjardins:

    I was looking up, for example, what, again, one of these plans might look like for me or someone like me.

    And the deductibles are huge. You would pay everything up to, say, $10,000, but your premium is much less. Who would benefit from this? Who would be the winners of this change?

  • Julie Appleby:

    So, the folks that might find these appealing are generally younger and healthier people, those folks who don't have a preexisting condition, because, remember, those folks aren't going to be able to buy these.

    So that might appeal to them. And it's also folks who are struggling right now to pay for an Affordable Care Act plan because they don't get a subsidy. Remember, the Affordable Care Act provides subsidies to people who earn up to about 400 percent of the poverty level, which is about $48,000 for an individual.

    But if you don't get a subsidy, some of the premiums can be very expensive. So the Trump administration says, we want to offer these plans. They are going to be lower-cost. But they do come with this caveat that they cover a lot fewer things, and they may have very high deductibles.

    And the other thing, that these short-term plans don't have to follow a lot of the Affordable Care Act rules. So they could have annual or lifetime limits, which are also barred in the Affordable Care Act plans.

    (CROSSTALK)

  • Lisa Desjardins:

    If you get a catastrophic disease, for example.

  • Julie Appleby:

    Some of — some of the patient advocacy groups, many of the patient advocacy groups are very concerned about these plans, that people who are sick are going to perhaps buy them or become sick while they have one and realize that they don't cover a lot of things or that there are these high deductibles.

  • Lisa Desjardins:

    If you hit $500,000 of cancer treatment, you may be on the hook for what's left, for example.

  • Julie Appleby:

    Right. Some of them may have a limit of $250,000 a year in coverage or $2 million a year in coverage or that type of thing.

    So that's where folks are really going to have to read the fine print on these plans. The Trump administration in their new rule that came out today said that they are going to require insurers to put sort of a little box on their plan and say, these plans may not cover everything, read everything.

    It might not cover hospitalization. It might not cover emergency room care, and to read the plans carefully before you purchase it.

    (CROSSTALK)

  • Lisa Desjardins:

    Risk warning for the — for your insurance.

  • Julie Appleby:

    Right.

  • Lisa Desjardins:

    I want to talk about the scope of this.

    This — let's look at the numbers about short-term plans. Right now, there are some, it looks like, 122,500 people who use these plans on the individual market. The White House has said in the last day that they think this change will change that substantially to 600,000, almost five times as many, and then, in three years, that will be almost more than 1.5 million people who use these short-term plans.

    That's a huge change for these plans. But what does that mean in terms of individual markets? And how is this going to affect the health of Obamacare? Because, obviously, this is the president trying to go after the Affordable Care Act.

  • Julie Appleby:

    There's been a number of estimates on how many people would buy these plans. And I think until they come out and insurers start offering and we see how many people sign up for them, it's hard to say.

    The government does expect about 600,000 people in the first year, in 2019. And they think, of those, about 200,000 of them will come from the Affordable Care Act plan. These are folks who probably don't get a subsidy. So they might jump to one of these.

    The concern is — and the government and other estimates have shown that this will raise premiums for those folks who stay in the Affordable Care Act, because it siphons out probably the younger and healthier folks.

    So, then the premiums may go up in the Affordable Care Act marketplace. If you're getting a subsidy, your subsidy is also going to increase. So folks who get a subsidy may not see that much of a difference.

    But the very people that are struggling to buy coverage right now, those folks who are buying it on their own, and they don't get a subsidy, they may see a premium increase as a result. And some of them may not be able to buy one of these short-term plans because they have a preexisting condition.

  • Lisa Desjardins:

    So, while this isn't a huge market itself, it will grow, and it could have a lot of ripple effects.

  • Julie Appleby:

    It could have some ripple effects.

    As you mentioned, there's about 14 million people in the plan — in the Affordable Care Act now; 200,000 of those leave, but, over time, that could grow up quite a bit.

  • Lisa Desjardins:

    Julie Appleby with Kaiser Health News, thank you very much.

  • Julie Appleby:

    Thank you.

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