The Association for Community Affiliated Plans has weighed in on short-term, limited-duration insurance plans, which were expanded in 2018 under the Trump Administration. ACAP has urged President Biden to put an end to these expanded plans, which the group dismisses as "junk insurance."
In 2018, the Trump Administration finalized the rule for short-term, limited-duration plans to extend their availability from three months to one year. Individuals can renew these plans for a maximum of three years, which was a major change from the proposed rule introduced earlier in the year.
Before passage of the rule, short-term plans covered a maximum period of three months, without the ability to renew. At the time, the U.S. Department of Health and Human Services said the plans would be attractive to those priced out of the Affordable Care Act Market who had been poorly served under the ACA, such as middle class consumers with no access to employer insurance.
HHS said the plans would offer lower premiums because they were not mandated to follow the coverage of a qualifying health plan. Agency officials said they would not divert many from the ACA market.
In a 2-1 decision in July 2018, the U.S. Court of Appeals for the District of Columbia Circuit said the sale of short-term limited duration insurance plans is neither contrary to law nor arbitrary and capricious, meaning the sale of plans that don't comply with the ACA could continue.
Now that a new administration has moved into the White House, ACAP is urging President Biden to reverse course, saying limited-duration plans pose a threat to consumers because they're an inferior substitute for comprehensive coverage, and should instead revert to their role as stopgap coverage. Biden has said he supports strengthening coverage of the law he helped to pass as vice president under President Barack Obama.
ACAP CEO Margaret Murray said in a statement this week that short-term, limited-duration plans have left consumers with hundreds of thousands of dollars in medical bills.
"When President Biden signs an executive order opening a special enrollment period for the federal marketplaces to account for insurance losses due to the COVID-19 pandemic, consumers should not have to worry that they will fall victim to deceitful brokers marketing junk insurance," Murray said. "Allowing these plans to compete directly with ACA-complaint plans chips away at crucial consumer protections and threatens higher premiums for ACA-compliant health plans."
WHAT'S THE IMPACT?
Short-term, limited-duration insurance plans are not required to comply with federal requirements for individual health insurance coverage and are designed to provide temporary coverage for individuals transitioning between healthcare policies, such as an individual in between jobs, or a student taking a semester off from school.
Key stakeholders, including state regulators, have expressed concerns that the pre-2018 limit could cause harm to some consumers, limit consumer options and have little positive impact on the risk pools in the long run.
The average monthly premium for an individual in the fourth quarter of 2016 for a short-term, limited-duration policy was approximately $124, compared with $393 for an unsubsidized individual market plan.
THE LARGER TREND
ACAP is hardly alone in its criticism of these plans. America's Health Insurance Plans said during the proposed rule stage that it was concerned the short-term plans would encourage healthy consumers in the ACA market to leave to purchase short-term plans.
AHIP asked HHS at the time to shorten the duration of short-term limited-duration insurance from one year to six months, in part because the plans would not be required to follow ACA requirements for essential benefits and could deny coverage to individuals who have preexisting conditions. This would leave sicker, riskier individuals in the ACA market, driving up premiums.
While insurers recognize that Americans who buy their own coverage need more affordable options, particularly if they do not qualify for federal subsidies, AHIP believes that states should have primary responsibility for managing their individual markets.
Short-term plans may also not cover preventive care, prescription drugs, mental healthcare or treatments for chronic health conditions such as diabetes or heart disease. They may also impose annual, lifetime or daily limits on coverage and could leave a consumer without coverage until the next open enrollment period when the short-term plan ends.