The Trump administration rolled out a new proposal Tuesday morning that would expand access to short-term health insurance plans that are exempt from crucial Obamacare requirements, causing many to fear for the future stability of the Affordable Care Act state exchanges.
“Americans need more choices in health insurance so they can find coverage that meets their needs,” Health and Human Services Secretary Alex Azar said Tuesday. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices.”
The administration’s proposal would expand consumer access to more affordable coverage–short-term, limited duration health insurance plans–as a direct alternative to Obamacare plans offered on the Affordable Care Act (ACA) exchanges. These short-term plans are cheaper because they do not have to cover pre-existing conditions or cover Obamacare’s “essential health benefits.”
Traditionally, short term health plans are meant for those who are in need of temporary coverage. For instance, maybe a person lost their job and, with it, the company’s employer-sponsored insurance plan.
Short-term health insurance plans come with an important caveat that Obamacare plans do not have. Unlike plans purchased on the Obamacare exchanges, short-term health insurance plans can cap payouts, which means consumers could get hit with a huge bill if they have some catastrophic health event.
Expanding short term plans comes after an executive order from the administration that aimed to expand access to affordable coverage and mitigate rising health care costs.
The Trump administration plans to expand these short term plans maximum length to one-year. The Obama administration limited these plans down to a maximum length of three-months in an effort to ensure healthier, younger consumers or those that would otherwise choose non-Obamacare plans would still stay in the ACA marketplace.
There is some concern that offering short term, non-ACA compliant plans will move a swath of healthier consumers out of the Obamacare marketplace, as consumers seek lower costs and lower premiums.
The administration told reporters Tuesday morning that its independent analysis predicts that only 100-200,000 consumers will shift from the Obamacare marketplace into the short term insurance pool. The administration expects that consumers within the Obamacare marketplace could experience premium increases of roughly $70 a month.
The administration said it doesn’t expect it to have any tangible effect on the Obamacare risk pool–the key concern among supporters of the Obama-era health law and those who obtain coverage on the ACA state exchanges.
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