Like most everything the Trump administration is doing, the newly-approved short-term health insurance plan it has rolled out is controversial. How controversial — we guess — has to do with your view of the Affordable Care Act and the president himself, and how the two relate to each other.
And now to — maybe — how it all relates to you...
President Trump says health insurers are “going wild” over the new options and that very soon millions upon millions of us will sign up for the new type of coverage.
Here are the details. The administration has approved the sale of short-term, limited-duration insurance. President Trump calls them low-cost alternatives to the higher priced plans of ObamaCare. The lower prices, as you know, means less coverage and a higher cost for pre-existing conditions — if an insurer will even cover them at all.
The plans also do not have to cover prescriptions, maternity, mental health issues and substance abuse treatment.
In a statement on the rollout Trump said, “So all of the insurance companies are going wild, they want to get it. You’re going to have great health care at a much lower price.” Then in a tweet he noted the plans will be “somewhat different, result the same. Much less expensive health care at a much lower price; will cost our country nothing.”
Insurers aren’t so sure.
Some think the new plans have a lot of downside for consumers. Plus, they need to be approved by insurance regulators in the individual states before they can actually be sold. Many insurance commissioners oppose the idea so it may be a long climb upward for the short-term plans.
America’s Health Insurance Plans (AHIP) spokeswoman Myra Simon said you’ll start seeing advertising for the plans this fall. However, they will likely be hard to find since not everyone will be eligible to get one and a lot of state insurance commissioners aren’t going to approve them.
The Blue Cross Blue Shield Association agrees and said, “the broader availability and longer duration of slimmed-down policies that do not provide comprehensive coverage has the potential to harm consumers.”
Jeff Smedrud is the CEO of Pivot Health. His company already offers short term plans and says the insurance industry is not up to speed on what must be done to offer them. He said look for minor improvements by October but not much else until 2019.
As to whether these plans will actually end up making insurance less expensive? AHIP’s Simon said not so fast. A lot of people may want to buy these plans thinking they’ll save money and if something catastrophic happens they can always jump back to ObamaCare and pick up new insurance from HealthCare.gov.
She then referred to the AHIP official statement on the short-term plans. “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 statement said.
Simon said with very few exceptions, you can only sign up for Affordable Care Act plans during open enrollment. That’s from November 1st to December 15th. So if something critical comes up people might wait months to get into a comprehensive plan that covers the ailment.
“It’s not simple to move back and forth,” she said.
Here’s another problem insurers have with the Trump plan. It comes courtesy of Gary Claxton of the Kaiser Family Foundation. He said these plans may end up making insurance more — not less — costly.
The administration says short-term plans can be picked up to cover 90-days. It also allows insurers to offer coverage up to 36-months. That means they’ll be taking on more — not less — risk. “You’ll have to pay more up front because there’s a longer time during which you could get sick,” Claxton said.
Smedsrud agrees. “The longer you cover somebody, the more likely it is you are going to have a claim,” he explained.
Even though the Department of Health and Human Services (HHS) is asking state regulators to approve the plans, many oppose the short-term policies. California Insurance Commissioner Dave Jones — and others — are saying no. They note the plans are not good for consumers and are not a good substitute for something more comprehensive.
“These policies are substandard, don’t cover essential health benefits, and consumers at a minimum don’t understand [what they’re buying], and at worse are misled,” he said.
HHS Secretary Alex Azar disagrees. “We believe sensible state regulation of these plans is important.
But millions of Americans are in need of affordable insurance options, and states can help build this market outside of Obamacare’s broken regulations,” he said.
His plea is falling on the deaf ears of many regulators and many insurance companies. They believe the plans will drive up costs for all other health insurance. Jessica Altman — who is the insurance commissioner in Pennsylvania — said insurers she’s talked with say this creates a dangerous secondary market.
That market will take people healthy people away from ObamaCare and when they leave prices will rise. “The individuals who are able to access these plans, those willing to take the risk, they won’t have significant needs, they will be disproportionately healthy, so that will lead to a more expensive individual market, and will drive up prices for those who need it,” she said.
Jones said the California Legislature is looking at a bill to permanently ban the sale of short-term plans. Right now the state allows such plans for 185-days.
Hawaii has already passed a law that prohibits people from purchasing a short-term plan when they are eligible for a plan on the ObamaCare exchange. Maryland’s Legislature passed a bill that says short-term plans can be purchased and can last three-months. They cannot be renewed.
The Oregon Department of Insurance issued a statement on the matter. It said federal regulations do not limit a state’s ability to establish laws regarding these short-term plans and, “It is a violation of Oregon law to market, sell, or offer short-term health insurance policies that exceed three months, including renewals, and a new policy cannot be issued to a customer within 60 days of expiration.”
Washington State’s Insurance Commissioner Mike Kreidler — a staunch defender of ObamaCare — said he’s working on new rules to allow coverage for three-months with no renewal. He also wants very strong transparency requirements.
“What I worry about the most is the agents and brokers selling the plans. They are looking at the [large] commission, and that blinds them to their legal responsibility,” he said.
That responsibility is to inform consumers about the limitations of a short-term plan, a concern shared with Altman in Pennsylvania. She said she’s already revoked the licenses of eight agents and brokers who misrepresented how a short-term plan works.
Tennessee’s insurance commissioner is Julie Mix McPeak.
She worries — like the others in this story — that consumers will not truly understand what they are buying.
“We have to really make sure consumers know what they’re purchasing, and they’re aware of what’s covered and what’s not covered. The last thing we need is for consumers to have surprise bills,” she said.
Part of the problem her state faces is the lack of competition. There is only one insurer in the ObamaCare exchange in Tennessee. “We need competition. Having a plan that can be a stopgap measure, and affordable, is not necessarily a bad thing,” Mix McPeak added.
Kriedler agrees temporary is not necessarily a bad thing. He and Altman understand there is a need for that kind of a plan but that’s not how the administration is marketing the new policy.
“The message getting out there is that these plans can and should be looked at as an alternative to major medical coverage,” Altman said. “There are so many things those plans don’t have to do or cover. So on their face, these plans are not comparable to [ObamaCare] compliant plans,” she said.
Source links: Insurance Business America, The Hill