The new rule, established by the U.S. Department of Health and Human Services in August, reinstates a previous policy allowing individuals to purchase short-term plans for up to three years. The Obama administration had previously changed federal rules to limit the duration of short-term plan periods to three months.
The plaintiffs claim short-term plans could disrupt the government-managed insurance market established under the Affordable Care Act (ACA). The lawsuit also claims patients with pre-existing conditions will have difficulty finding adequate coverage if the rule change can stand.
The suit was filed in the U.S. District Court for the District of Columbia by the Association for Community Affiliated Plans, the National Alliance on Mental Illness, Mental Health America, the American Psychiatric Association, AIDS United, the National Partnership for Women & Families, and Little Lobbyists.
Joel White, president of the Council for Affordable Health Coverage, says short-term plans provide an affordable health insurance option many people prefer.
“While short-term plans constitute major medical health insurance, it’s true they do not meet all of the Afford- able Care Act’s requirements,” White said. “For example, short-term plans are not subject to the law’s protections for preexisting conditions or its essential health benefits. That’s why they’re not a solution for everyone. But the Congressional Budget Office estimates some two million Americans will choose these plans, and they deserve that opportunity—especially amid the dwindling choices and high costs that plague many of today’s public [health insurance] exchanges.”
Short-term plans don’t erode Obamacare, as some opponents claim, White says.
“The Trump administration’s rule largely reverts back to the policy that had been in place for decades,” White said. “There is little evidence short-term plans are upending Obamacare. There is a lot of evidence that Obamacare is upending affordability, as premiums and deductibles rise. As short-term plans become a more affordable option, we need to make sure that selection doesn’t create a death spiral in the Obamacare markets.
“There ought to be a balance,” White said. “Unfortunately, much of the opposition to short-term plans does seem to be rooted in party politics, and that’s a shame. The Affordable Care Act faces many challenges, but expanding access to short-term plans will not be the law’s undoing.”
States Banning Plans
California is an example of a state that has decided to institute an outright ban on short-term plans. In late September, Gov. Jerry Brown signed a bill banning short-term plans in the Golden State.
Democratic legislators in California have been calling short-term insurance “junk plans” because the policies provide some relief from ACA’s comprehensive coverage demands. Sally Pipes, president of the Pacific Research Institute, says the California Democrats leading the effort don’t seem to care about those most burdened by the rapidly expanding cost of health care.
“These legislators ignore the fact that over two million Californians are insured through the individual market,” Pipes said. “In 2019, their premiums will jump nearly 9 percent. Health and Human Services Secretary Alex Azar said these plans are not for everyone, and these plans do not have to comply with all of the mandates under Obamacare, which makes them more affordable.
“They are designed particularly to be a stopgap, offering protection for those in transition who might face a medical catastrophe,” Pipes said. “Many would go without coverage because of the high cost of premiums, and yet California’s leaders are responding by forbidding people to purchase more affordable coverage.”
Pipes says the California ban is part of a growing, partisan agenda to preserve what is left of Obamacare.
“California lawmakers have been influenced by the hysteria raised by many Democratic politicians in Congress and in several states who say short-term health plans are ‘junk plans,'” Pipes said. “They have taken steps to counteract the Trump administration’s new rule [because] they say it’s designed to ‘sabotage’ Obamacare’s exchanges.”
Right to Choose
People have the right to make their own health care decisions, including buying less-expensive insurance, if they want to, White says.
“There are few things more personal than the kind of health insurance you choose for yourself and your family,” White said. “Too many Americans lack real freedom in this sphere. In 2016, the Obama administration effectively took away a viable health insurance option—short-term medical plans— by limiting their duration to 90 days instead of the previous standard of one year. The administration’s decree added insult to injury for consumers who were already facing a dearth of real, affordable options on their health insurance exchanges.
“The Trump administration’s rule earlier this year will restore greater freedom in consumers’ health care decisions by permitting the renewal of short-term plans for up to 36 months,” White said. “For some consumers, these plans are 50–80 percent cheaper than Obamacare plans in their state. Just imagine what that savings could mean to a middle-class family’s pocketbook and to their economic freedom.”