The Trump administration's proposal to allow insurers to sell short-term medical plans that last up to 12 months, coupled with the repeal of the Affordable Care Act's individual mandate penalty in 2019, is bound to drive up enrollment in the short-term plan market next year. Some insurance companies are gearing up to capitalize on what they hope will be a flood of new customers by adding new, attractive benefits to their short-term products.
How stakeholders in the short-term medical market are gearing up to attract more customers
At the same time, a major online brokerage is shifting gears to promote "ACA alternatives" rather than putting comprehensive major medical plans front and center for health plan shoppers.
Both actions could draw more of the uninsured—and potentially some people now enrolled in the ACA exchange plans—into coverage that the sellers see as vital for consumers in a pinch, but that critics fear could leave the larger individual insurance market worse off. Short-term plan insurers will undoubtedly come out ahead with more cash in their coffers.
The Trump administration's February proposal would allow people to buy short-term, limited-duration medical plans that last up to 12 months, reversing an Obama-era rule that limited those policies to less than three months. The plans offer skimpier, cheaper coverage than the health plans found on the ACA exchanges because they do not have to comply with rules that prohibit plans from denying coverage for people with pre-existing conditions or charging more based on how healthy a person is. The plans also don't cover the ACA's 10 essential health benefits.Doctor who enroll in short-term plans have had to pay fines because the ACA doesn't consider the plans to satisfy its coverage requirement. But Congress has zeroed out the individual mandate penalty starting in 2019. Many experts expect short-term plan enrollment to grow after the Trump administration proposed extending their duration, potentially causing higher premiums for people who remain in the ACA marketplace. "We believe (the proposal) will very materially increase the marketplace for short-term insurance. That will become an avalanche in 2019 when the individual mandate is repealed," said Scott Flanders, CEO of private health insurance exchange eHealth, which offers short-term medical plans. The left-leaning Urban Institute projects that 4.2 million people will enroll in expanded short-term plans in 2019. While HHS has not given a projection, the agency said it expects about 100,000 to 200,000 people to switch from the ACA individual market to short-term plans. The average premium for a short-term plan was $110 per month for an individual and $267 for families in 2017, according to eHealth. The average premium for an unsubsidized person who bought an exchange plan on HealthCare.gov in 2017 was $476. "We can be sure that brokers will be pushing these short-term plans hard," said Larry Levitt, senior vice president with the Kaiser Family Foundation. "And when a healthy person sees how much they can save on the premium by switching to a short-term plan, it's going to be very appealing." That's good news for the handful of companies that dominate what is now a very small, but lucrative short-term plan market. Short-term plans don't have to comply with an ACA rule requiring individual market insurers to spend at least 80% of premiums on medical care, so those insurers are able pocket a larger share of the premiums they collect and pay out less on claims than ACA individual plans do, said Deep Banerjee, an analyst with S&P Global.
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