Iowa’s revised rules will go into effect in 2019.
Association health plans are group insurance plans that organizations and businesses offer to members. Short-term plans are limited-duration health insurance plans that offer fewer benefits than traditional plans, but they do so at much lower costs. Short-term plans are not subject to many of the rules and regulations mandated by the Affordable Care Act.
Since the Affordable Care Act was passed in 2010, health care premiums for plans offered in the individual marketplace have more than doubled. To reduce these costs, the Trump administration implemented two rule changes earlier in 2018. The first, passed in June and taking effect in August, allows small businesses to form associations to offer more affordable health insurance plans to their members. The second, passed in August and taking effect in October, expands the time- frame of short-term, limited-duration plans, allowing health insurers to sell plans with policies that last for up to one year and can be renewed for up to three years, a change from an Obama rule that required renewal after three months.
According to the research consulting firm Avalere Health, association health plans could cost $3,000 less per year than individual plans sold under Obamacare.
The expanded period for short-term plans will also lower costs because these plans are exempt from Obamacare’s expensive coverage mandates, which have accounted for 75 percent of premium increases since 2013, according to experts at McKinsey & Company.
An August 2018 eHealth report found a short-term health care plan for a 25-year-old woman in Des Moines would cost $43 per month. Comparatively, an Obamacare Bronze Plan, the least-expensive plan available on Obamacare exchanges, costs on aver- age $418 per month.
Expects Cost Reductions
Michael Cannon, director of health policy studies at the Cato Institute, says Iowa’s reforms will produce less-costly plans and increase access and consumer choice.
“Short-term plans save consumers money because they free consumers to purchase only the coverage they want and are not subject to the hidden taxes Obamacare imposes on young and healthy consumers,” Cannon said.
Cannon says more states will likely follow Iowa’s lead.
“States haven’t really had much time to react to the short-term plans rule,” Cannon said. “The federal government released them at the beginning of August, and they didn’t take effect until October 2.”
Travis Akin ([email protected]) writes from Chicago, Illinois.