CMS Considers Short-Term Insurance Rule Revision

Published April 29, 2018

The U.S. Department of Health & Human Services’ Centers for Medicare & Medicaid Services (CMS) is considering expanding the allowable length of short-term insurance plans from three months to 12.

Between February 21 and April 23, CMS accepted public comments on the proposed rule, which would reverse an October 2016 rule, enacted under President Barack Obama, that reduced the maximum duration of short-term health insurance plans to three months.

The proposed rule would take effect 60 days after the publication of the final version.

Potential for ‘Dramatic’ Cost Cut

Dr. Chad Savage, founder of YourChoice Direct Care and a policy advisor for The Heartland Institute, which publishes Health Care News, says the proposed CMS regulation could significantly lower the cost of health insurance.

“The proposed rule holds the promise of dramatically slashing the cost of health insurance by allowing the closest approximation we have had to true catastrophic insurance since the implementation of ACA,” Savage said. “Though people complain that these types of insurances don’t cover much, in honesty neither do the majority of insurance products on the ACA exchanges currently. The difference is, the person with one of these much less expensive insurance products may have enough money left over after paying their premium to actually afford medical care, compared to those being bankrupted by the ACA insurance products.”

Additional Option for Consumers

Joel White, president of the Council for Affordable Health Coverage, says many people can benefit from short-term health insurance.

“Consumers have often looked to short-term medical plans as a means of obtaining fast, flexible coverage when they need it most, especially now as Obamacare plans become increasingly unaffordable for too many,” White said.

“These plans could be an especially attractive option to someone who, for example, may be recently separated from their job but anticipates returning to work in the near future at a business with generous employer-sponsored coverage,” White said. “Someone in that position would be understandably hesitant to fork over the cash for the full cost of a comprehensive individual exchange plan with all the Obamacare bells and whistles.”

Obamacare Cost Spikes

Savage says the Affordable Care Act has made health care and health insurance unaffordable for many people.

“Though ACA was signed in 2010, it didn’t fully go into effect until January 1, 2014,” Savage said. “Overnight, insurance premiums skyrocketed. Individuals and employers, trying to combat this massive escalation, began selecting insurance with higher and higher deductibles. This only partially mitigated the premium increase and instead shifted more and more burden to the patient. Thus, for the first time in history we saw premiums and deductibles increase simultaneously without a trigger such as a natural disaster.”

‘Proposed Rule Trusts Consumers’

White says the proposed rule would help reduce the paternalism of government health insurance regulations.

“The proposed rule trusts consumers with greater decision-making power about the cost and quality of their health insurance, rather than Uncle Sam,” White says. “Americans know that short-term medical insurance often consists of skimpier plans. But if you are a young, healthy person who is in a pinch and simply wants coverage to protect yourself in the event of the unthinkable, that may be all you need.

“The decision should rest with the consumer, and we are pleased to see the administration acknowledge that with this rule,” White said.

The proposed rule would ease people’s fear of the government penalizing them for choosing a plan they prefer, White says.

“Short-term plans offer a viable choice for many Americans who need a temporary solution to obtaining affordable coverage,” White says. “By giving Americans the knowledge that they can use a short-term plan for a period of up to a year without fear of government penalty, just as they had been able to do all along before the Obama administration attempted to rewrite the rules, we can inject a little more certainty, peace of mind, and choice for consumers into an often uncertain healthcare market.”