The Trump administration released on Wednesday the long-awaited final version of its new rule governing short-term insurance plans. Under the rule, consumers will be able to purchase policies lasting up to 12 months, and can potentially renew those policies for an additional two years. (The Obama administration had previously issued a rule limiting the duration to three months.)
Short-term insurance plans, which are not subject to the Affordable Care Act’s regulations, are often cheaper for healthy consumers. The Trump administration argues the policies will provide much-needed relief to middle-class consumers facing high premiums in ACA-compliant plans, many of whom are currently fleeing the non-group market.
“These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system,” said Secretary of Health and Human Services Alex Azar in a press release.
But the lower premiums come with a tradeoff: The plans can deny coverage to consumers with pre-existing conditions (or charge them higher premiums); typically don’t cover benefits such as maternity care, prescription drugs, or mental-health treatment; and can cap annual coverage. ACA advocates also worry that, by drawing young, healthy consumers out of the risk pool, the plans will further destabilize the ACA’s non-group markets.
As Larry Levitt of the Kaiser Family Foundation points out, the burden of this policy will fall most heavily on “middle-class people with pre-existing conditions” who earn too much to qualify for the ACA’s subsidies, but are not healthy enough to get cheap coverage via short-term insurance plans. Importantly, states will retain the ability to regulate these plans.
