While short-term plans are most popular among young people, who are least likely to face major medical issues, a quarter of consumers between 45-64 opted for the cheaper, less comprehensive plans. (Photo: Shutterstock)
For better or worse, there appears to be a substantial market for short-term health plans that don't offer the services typically provided by major medical insurance.
The Obama administration sought to discourage consumers from opting for short-term plans, which generally do not cover preventative care and an array of other services deemed "essential" by the Affordable Care Act, such as maternity care or mental health treatment. A rule put in place shortly after the ACA only allowed such plans to offer a maximum of 90 days of coverage.
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The Trump administration has proposed allowing short-term plans to offer coverage for up to 12 months. The administration has projected that between 100,000 and 200,000 people who are currently covered under an ACA-compliant plan will opt for a short-term plan if the rule takes effect.
In a recent article for StatNews, Scott Flanders, CEO of eHealth, an online insurance broker, reported that demand for short-term plans has increased in recent years. In 2017, applications for such plans accounted for 57 of the total, up from 47 percent in 2016.
In a survey of customers, 61 percent said they opted for a short-term plan because they needed coverage for only a short period of time. Twenty-seven percent said that price was their main motivation.
While short-term plans are most popular among young people, who are least likely to face major medical issues, a quarter of eHealth's customers between 45-64 opted for the cheaper, less comprehensive plans.
Flanders frames short-term plans as a logical alternative for people who have been priced out of the conventional individual insurance market. Although the great majority of ACA customers receive subsidies that cover a significant portion of their premiums, those who don't qualify for subsidies will naturally consider a short-term plan that is an average of four times cheaper than an ACA plan.
"Allowing short-term health policies to offer coverage beyond 90 days will not bring down the Affordable Care Act," writes Flanders. "It's the outrageous cost of coverage in the ACA market that's going to do that if serious steps aren't taken soon. Without loosened restrictions on essential health benefits required by ACA plans, or richer and broader premium subsidies for middle-class families that don't qualify for help today, it's difficult to see any relief on the horizon."
Suffice it to say, plenty of health policy experts disagree. Like the repeal of the individual mandate, short-term plans will draw people away from the ACA market, further rattling it and driving up premiums.
"There won't be a death spiral," Michael Miller, policy director of Community Catalyst, a consumer advocacy group, tells Politico. "But the people who really lose in that scenario are basically middle-class people who are sick."
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