On August 1, the Trump administration extended the allowable terms of “Short Term Limited Duration Plans.” Instead of the current limit of three months, the policies will be available for 12 months at a time, and customers will be able to renew the policies for additional years. A federal analysis accompanying the new rules estimates that 600,000 extra people will buy such plans next year, increasing to 1.6 million within four years.
The plans can deny consumers coverage for having preexisting conditions or charge them more based on their health status. The plans also do not have to cover the Affordable Care Act (ACA) 10 essential health benefit categories, such as maternity care or prescription drugs.
Federal health officials have portrayed this expansion of alternative coverage as a way to make insurance more affordable. When the proposal was announced earlier this year, it was met with opposition from the health insurance industry, hospitals, and patient advocacy groups. In comments submitted on the proposed rule in April, WHA highlighted concerns about short-term insurance policies being exempt from aspects of the ACA that are meant to protect consumers, as well as the potential impact on the individual market.
"Today's final rule will reintroduce to an already shaky individual market health plans that do not constitute true 'insurance,'" said AHA President and CEO Rick Pollack on August 1. "While these products may be appealing because of their cheaper price tag, the reality is that they could end up costing a patient far more by covering fewer benefits and ensuring fewer critical protections, like covering pre-existing conditions. Patients could find themselves responsible for their entire medical bill without any help from their 'health plan.' For providers, these products will lead to increased bad debt, with underinsured patients unable to afford the care they need but that is not covered.” The final rule goes into effect 60 days after it is posted, though state regulators still need to approve new plans. The plans are effectively banned in New York, New Jersey and Massachusetts, and several other states, such as California and Minnesota, impose restrictions on the policies.