Short-term Health Insurance Plans: Obamacare Foil or Real Consumer Choice Solution?
by Doug Williams, Mar. 14, 2018
Last month, the Trump administration proposed new rules that would make it easier for consumers to buy and keep short-term insurance policies that do not comply with Affordable Care Act (ACA) coverage standards. Under the ACA, these short-term policies have a time limitation of three months and are primarily geared towards people who are temporarily between jobs. The new proposed rules expand the duration of these plans to up to one year.
The short-term plans, which can cost less than half of plans that are fully compliant with the ACA, often lack key coverage for pre-existing conditions, major medical expenses, mental health, maternity, and many chronic conditions. Proponents of the plans tout the need to have a solution for the rising costs of health plans currently available through the health insurance exchanges. They cite the exponential hikes in healthcare premiums over the last five years as a pervasive problem that demands a solution.
Opponents believe that these short-term plans undermine the entire health insurance system and the ACA’s foundation, which relies on the inclusion of both healthy consumers and higher utilizers of healthcare to spread costs over a large pool of members. Based on their coverage limitations, short-term plans would attract healthier populations and leave more costly members in the ACA coverage-compliant plans. This may, in turn, lead to increased premiums for coverage-compliant plan members. Consumer advocates are also concerned that individuals may elect these plans without fully understanding the implications, which include unlimited out-of-pocket costs for members and risks associated with developing a chronic condition that is not covered.
Opinions on the issue are split, often on party lines, with Republicans championing the need for consumer choice and Democrats supporting consumer protections as the paramount issue. Regardless of where you stand politically, one thing is clear—neither short-term insurance plans, nor preserving the Obamacare provisions in totality, is the answer to our nation’s healthcare system inefficiencies. Incremental improvements are good, but true reform will require changes that drive down real costs across the board, while simultaneously improving care. Harnessing healthcare data to identify inefficiencies in care coordination, treatments, billing, and member engagement is the first step to real reform, while being open to healthcare innovations such as telehealth, virtual reality, robotics, and other technologies will drive our system towards real improvement.
As for short-term insurance plans, individuals and organizations have until April 23 to submit their comments to the Trump administration on the proposed rules. Final rules are expected to be released by late Spring. HMS® will be submitting our comments, will you?
Doug Williams is president, markets and product, for HMS.