Short-term limited duration plans finalized by the Trump Administration on Wednesday could subject patients to catastrophic medical bills and medical bankruptcy, stakeholders told the Departments of Health and Human Services, Labor and Treasury in commenting on the final rule.
Enrollees suffering acute health emergencies, debilitating injuries that lead to permanent disabilities, or the onset of chronic conditions could end up facing financial hardship until they can enroll in an individual or group market plan that provides the coverage they need, according to the final rule.
The rule extends short-term, limited duration coverage from three months to a year, with extensions available for up to three years.
Devastating for hospital ERs
America's Health Insurance Plans said it was concerned the new plans could catch some consumers unaware and facing high medical expenses when the care they need isn't covered or exceeds their coverage limits.
Hospitals could be affected by an increase in uncompensated care because the plans are not qualifying health plans mandated to cover the essential benefits of the Affordable Care Act, those commenting on the final rule said.
Stakeholders said the proposed changes could have a devastating impact on hospital emergency rooms, since ERs are required to provide care regardless of coverage status or one's ability to pay.
"In addition, the lack of coverage of essential health benefits may also lead to an increased reliance on emergency departments as consumers delay or do not seek primary care, exacerbating existing acute and chronic conditions," the final rule said.
One commenter said this may also lead to increased boarding of mental health patients in emergency departments, where some have an average stay of 18 hours.
If a short-term, limited-duration insurance policy excludes treatment in hospital emergency rooms, there is the possibility that there could be increases in uncompensated care provided by hospitals, according to the departments which issued the rule.
However, there is no reason to believe that all short-term, limited-duration insurance policies will exclude such coverage, the rule said.
In addition, short-term limited duration plans could result in a decrease in uncompensated care if people who otherwise had no insurance become insured.
Many commenters expressed concern that extending the maximum duration of short-term, limited-duration coverage would weaken the single risk pools and destabilize the individual market by syphoning young, healthy individuals from ACA plans. This would leave on the exchanges only those with higher expected health costs and those receiving subsidies in the individual market.
An estimated 70 percent of ACA enrollees receive a subsidy of a premium tax credit.
The departments acknowledge that relatively young, healthy individuals in the middle-class and upper middle-class whose income disqualifies them from obtaining premium tax credits are more likely to purchase short-term, limited-duration insurance.
"As people choose these plans rather than individual market coverage, this could lead to adverse selection and the worsening of the individual market risk pool," the rule said.
It could also result in higher premiums for some consumers remaining in the Affordable Care Act market as healthier consumers choose short-term plans and their lower premiums, the rule said.
"The new requirement for short term plans to make clearer disclosures to consumers is an important improvement."
Matt Eyles, AHIP
Individuals who choose to purchase short-term, limited-duration insurance are expected to pay a premium that is approximately half of the average unsubsidized premium in the exchange.
Individual market premiums increased 105 percent from 2013 to 2017, in the 39 states using Healthcare.gov in 2017, while the average monthly premium for the second-lowest cost silver plan for a 27-year-old increased by 37 percent from 2017 to 2018.
Premiums for unsubsidized enrollees in the exchanges are expected to increase by 1 percent in 2019 and by 5 percent in 2028.
In 2019, when the short-term plans go into effect, enrollment in these plans will increase by 600,000. About 100,000 of these consumers will have been previously uninsured.
Enrollment in the ACA exchange in 2019 is expected to decrease by 200,000.
By 2028, enrollment in individual market plans is projected to decrease by 1.3 million, while enrollment in short-term, limited-duration insurance will increase by 1.4 million, according to the final rule.
The net result will be an increase in the total number of people with some type of coverage by 0.1 million in 2020 and by 0.2 million by 2028.
Benefits of short-term plans include increased profits for insurers of these plans and potentially broader access to providers compared to ACA market plans.
Short-term plan shortcomings include high deductibles and cost-sharing requirements.
For example, in Phoenix, Arizona, the out-of-pocket cost-sharing limit for a 40-year-old male can be as high as $30,000 for a 3-month period. Another commenter pointed out that in Georgia, a plan had a 3-month out-of-pocket limit of $10,000, but did not include the deductible of $10,000, resulting in an effective 3-month out-of-pocket maximum of $20,000.
ACA plans also have high premiums and out-of-pocket costs, the rule said. In 2018, deductibles average nearly $6,000 a year for bronze single coverage and more than $12,000 a year for bronze family coverage.
Matt Eyles, president and CEO of America's Health Insurance Plans said, "Consumers deserve more choices, particularly those who do not qualify for federal subsidies and must pay the full premium. Consumers should clearly understand what their plan does and does not cover. The new requirement for short term plans to make clearer disclosures to consumers is an important improvement. We also appreciate that the rule affirms the role of states to regulate these plans, including the option to reduce the duration period for short-term coverage."