The Trump administration is proposing to expand the availability of short-term insurance plans, offering a cheaper health coverage option for consumers, while taking another step to undercut Obamacare.
The Department of Health and Human Services proposed allowing short-term plans to be sold for coverage periods of as long as a year, an increase from the current maximum of three months set by the Obama administration. The plans would also be allowed to offer far less comprehensive coverage than plans sold under the Affordable Care Act.
The short-term plans are likely to appeal to healthier individuals who don’t believe they need full coverage, potentially drawing them out of Obamacare’s markets. Combined with earlier moves by the Trump administration—such as ending the ACA requirement that all people buy health coverage or pay a fine—the latest proposals could result in higher costs or fewer options for individuals who still want to buy the more comprehensive Obamacare plans.
The administration said its goal is to give people more insurance options at a time when premiums have been rising.
“It’s one step in the direction of providing Americans with health insurance options that are both more affordable, and more suited to individual and family circumstances,” HHS Secretary Alex Azar says. “We need to be opening up more affordable alternatives to the all too often unaffordable Affordable Care Act health insurance policies.”
The administration, in the proposed rule announced Tuesday, said the short-term plans may lack some Obamacare protections, such as required coverage of pre-existing conditions, and coverage for a broad array of services such as maternity care, hospital stays and prescription drugs. But it anticipates that most of the individuals who switch to the plans will be “relatively young or healthy.”
The proposed rule builds on an executive order the president issued last year. The health insurance industry has been divided on the plans, with some insurers already offering them, while others worry they could undermine the ACA’s individual market.
UnitedHealth Group, the largest health insurer, already offers short-term coverage, and has said it would explore expanding those offerings. Two major industry lobby groups, America’s Health Insurance Plans and the Blue Cross Blue Shield Association, have warned that the short-term plans could harm state insurance markets.