Due to repeated attempts at sabotage by the Trump Administration, the Affordable Care Act's individual marketplace has seen rising prices over the past year. The average premium cost rose by 30.6% between 2017 and 2018 in Pennsylvania.  Lawmakers on both sides of the aisle, as well as health policy experts, have called for the passage of a stabilization package that would shore up the marketplace and prevent prices from rising further in 2019.

While a bipartisan group of Senators works on the stabilization package, the Trump administration is pushing to include plans that do not cover all the essential health benefits nor provide protections for pre-existing conditions in the package. These plans – including short-term, limited duration plans — were prohibited by the Affordable Care Act because they left many enrollees without adequate coverage and would seriously undermine efforts to stabilize the marketplace.

Short-term plans are currently allowed for precisely that, a short gap. The Affordable Care Act allows these limited short-term plans to cover someone 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.

The 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.  States like New York and New Jersey require plans to cover all consumer protections and regulations. Rhode Island requires plans to cover pre-existing conditions. Arizona and Minnesota limit plans to six months, while Oregon limits plans to three months. Pennsylvania has none of these requirements or protections.

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 and healthier individuals to leave the marketplace.

According to this report, 209,000 people 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 coverage– to the ranks of the uninsured.  The 165,000 people 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% increase in individual marketplace plan premiums in 2019.

State lawmakers can take action to stop this. Pennsylvania could limit the plans' length, limit the number of renewals, or require plans to cover pre-existing conditions. The Commonwealth currently does not have these protections. At the end of 2017, Senator Vincent Hughes introduced Senate Bill 958, which would require all health insurance policies to cover pre-existing conditions. Pennsylvania needs strong state action now to protect consumers from short-term plans.

Furthermore, lawmakers in Washington should ensure that any market stabilization package does just that: stabilize insurance markets.  Including increased usage of short-term plans in the package is unacceptable and would undermine their efforts.