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Federal court to consider injunction to stop short-term plans

Rule creates a "parallel individual insurance market" not subject to the ACA's consumer protections, complaint states.

Susan Morse, Senior Editor

A hearing on a requested injunction against the Trump Administration's rule allowing for short-term health plans goes before a federal judge on Friday, Oct. 26 in Washington, D.C.

Seven stakeholders filed a motion in September to immediately suspend the rule because it goes against the Affordable Care Act's mandate to cover essential health benefits and consumers who have pre-existing conditions.


Insurers are harmed because healthy consumers will exit the ACA market to get these less expensive plans, leaving those with chronic conditions and other health issues to purchase coverage for increasingly expensive ACA plans, the plaintiffs said.

Healthcare providers will not receive payment under these policies for all of the care that is required to be covered by ACA-compliant individual health insurance plans, they said.


In August, the Departments of Labor, Treasury, and Health and Human Services issued a final rule to allow for short-term, limited duration health insurance that creates "a parallel individual insurance market consisting of plans that are not subject to the ACA's consumer protection standards," the court complaint states.

This short-term coverage, which was formerly allowed for up to three months, was extended to a year, with the ability to extend the insurance for three years.


"If it is permitted to take effect, the STLDI Rule will inflict serious harm on insurers and the health insurance marketplaces established by the ACA, making it much more expensive for anyone to purchase health insurance with all of the ACA's protections and covering all of the essential health benefits mandated by the ACA," the complaint said.


The complaint was filed by Affiliated Plans, an association of insurers that provides coverage on the ACA market, and organizations that represent consumers who would be unable to purchase STLDI coverage due to exclusions in essential benefits and coverage restrictions. These include: the National Alliance on Mental Illness, Mental Health America, the American Psychiatric Association, AIDS United, the National Partnership for Women & Families and The Little Lobbyists, which represent families with children who have serious health issues.


The Trump Administration has said it wants consumers to have an affordable alternative to getting coverage through the ACA. The move to allow other types of insurance represents an attempt to dismantle the ACA after Congressional attempts have failed.

Healthy consumers who were unable to take advantage of tax subsidies under the ACA, or who opted against getting covered, may rest easier buying less expensive health insurance.

However, when getting care, they may be surprised when their insurance doesn't cover their costs, leaving them with high, out-of-pocket medical expenses and hospitals to face uncompensated care.

Insurers have also spoken out against plans that could catch consumers unaware of their coverage limits. America's Health Insurance Plans had asked that short-term plans be extended to six months only.

Since the rule goes into effect 60 days after its posting on August 1, it remains to be seen whether the exodus from the ACA will take place, and whether these short-term plans gain traction.

Twitter: @SusanJMorse
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