WHAT’S A SHORT-TERM LIMITED DURATION PLAN?
The Trump administration is pushing states to allow increased usage of plans that do not cover all the essential health benefits nor provide protections for pre-existing conditions. These plans – including short-term, limited duration plans — were prohibited by the Affordable Care Act because they left many without adequate coverage.
Short-term plans are currently allowed as a short-term solution for folks with gaps in coverage . The Affordable Care Act allows this for up to three months, but requires that individuals have full coverage for the majority of the year. The Administration, however, wants to lengthen the amount of time that people can be covered by these plans, possibly extending them beyond a year.
Here’s why short-term, limited-duration plans are problematic, especially over a long period of time:
- They are not required to cover pre-existing conditions.
- They are allowed to charge individuals more based on their health history.
- They are not required to cover essential health benefits (e.g. prescription medications).
- They do not cap out-of-pocket expenses.
- They may have benefits limits after which the coverage stops paying.
- They do not qualify for Federal financial assistance.
- They encourage healthier, younger people to leave the ACA marketplace in favor of cheaper (but inadequate) coverage, forcing insurers to increase marketplace prices yet again.
HOW WILL THIS IMPACT PA?
Without any protections, the impact of short-term plans on Pennsylvania is significant, according to a new report by the Urban Institute. Importantly, the effect is cumulative when combined with the repeal of the Affordable Care Act’s individual mandate last fall as part of the tax package as both policies encourage younger-healthier individuals to leave the marketplace.
According to this report, 209,000 are expected to lose coverage in Pennsylvania as a result of the repeal of the individual mandate. Because of the resulting increase in premiums, expanding short-term plans would add an additional 87,000 – or 18.2% of those who currently have marketplace covered– to the uninsured. The 165,000 expected to be covered under short-term plans will be technically insured, but their coverage will be inadequate. Combining the effects of this exodus from the marketplace, we will see roughly a 19.2 percent increase in individual marketplace plan premiums in 2019.
WHAT CAN STATE LAWMAKERS DO?
Pennsylvania needs strong state action now to protect consumers from short-term plans. The Administration’s proposed rules to expand short-term plans allow states to specifically regulate how these plans operate in each state. According to a Princeton study, states have several options. They could require short-term plans to comply with all or some of the Affordable Care Act’s consumer protections and market regulations. States could also limit the duration of those plans or impose stronger consumer protections. Pennsylvania currently has none of these requirements or protections.
Pennsylvania currently lacks any protections. State lawmakers should act quickly to limit the length of plans, limit the number of renewals, require plans to cover pre-existing conditions, or (preferably) all of the above. A bill to require pre-existing condition protections is already in Committee; at the end of 2017, State Senator Vincent Hughes introduced Senate Bill 958, which would require all health insurance policies to cover pre-existing conditions. This and other consumer protections need to be established quickly to avoid the harms of short-term plans.