The individual health insurance market has been a roller coaster for consumers since the passage of the Affordable Care Act.
Last year, the average ACA plan rose 34 percent – pricing out many of the individuals who do not qualify for federal subsidies. Additionally, many counties across the country have lost insurers, with only one option or even no options for consumers. Younger, healthier Americans have been forced into high-risk pools to subsidize the high-costs associated with pre-existing conditions and other benefits they are likely not to need. As a result, many have opted out of full coverage at all and risk incurring the Obamacare tax penalty for not carrying insurance.
After a failure of the Senate to repeal these disastrous policies, the Trump Administration has had few options for fixing our health insurance system. However, a year ago, some progress was made on this front.
With the passage of the Tax Cuts and Jobs Act in December 2017, Congress included the repeal of the tax penalty for individuals without medical coverage for policies beginning in 2019. Then in February of 2018, Trump issued an executive order allowing for the appropriate federal agencies to amend their rules regarding short-term duration health insurance.
Short-term duration insurance is not meant to qualify as full medical coverage, but instead is another insurance product available to help individuals through different periods of transition. Trump’s executive order overturned the Obama Administration’s directive to limit these plans to only 90 days. Instead they are now allowed to be issued for less than a year and may be renewed for up to three years.
These short-term plans will likely cost Americans half what the traditional ACA plan costs and the administration predicts around 600,000 people will choose these plans this year. Of the over half a million people, no more than a third are likely to leave their ACA plan; with most enrollees coming from individuals without any insurance at all.
Opponents argue the reversal of this rule will poach enrollees in the individual market. Obama’s rollback of short-term duration policies was meant to increase enrollment in the exchange. But it didn’t work. Instead, enrollment in the ACA plans decreased by 10 percent following the year of the rule change; which may have had something to do with premiums increasing by 21 percent that year.
There is a want and a need for more affordable policies that do not have all the bells and whistles of a traditional plan. Under the Obama 3-month cap of short-term policies, enrollees would have to reapply every 90 days, forcing a reset of their deductibles or sometimes a cancellation of their policy altogether. Given the short time frame, many customers would not be able to access full coverage insurance for months, until another enrollment period opened.
This rule change is good for consumers. It will dramatically expand choice and opportunity for coverage to hundreds of thousands of Americans.
Now it is up to the states to ensure these options will be available to their constituents by amending their laws to allow for greater regulatory flexibility of short-term duration plans. In Arizona, Representative Nancy Barto is sponsoring legislation to do just that. We encourage lawmakers to support this common-sense bill and allow more Arizonans to access affordable coverage.