With Federal Rules Weakened, States Should Act to Protect Against Short-Term Health Plans
New federal rules, released today, allow short-term plans exempt from pre-existing condition protections and benefit standards to last for up to one year and to be renewed. It's now up to states to protect their residents and their insurance markets from an expansion of substandard coverage. In several states, policymakers of both parties have already acted to set their own limits and consumer protections for short-term plans. Others are in the process of doing so, and all should consider taking action.
The federal changes, proposed earlier this year, roll back 2016 regulations defining short-term plans as those lasting less than three months, changing the definition to include those lasting less than a year.
This would let a parallel market for skimpy plans operate alongside the market for comprehensive individual health insurance, exposing consumers to new risks and raising premiums for those seeking comprehensive coverage, especially middle-income consumers with pre-existing conditions. Importantly, the rules take effect in early October, just before the
Short-term plans do not have to cover all of the ACA's essential health benefits, and they often don't cover such essential benefits as maternity and mental health care, substance-use disorder treatment, and prescription drugs. Short-term plans can deny coverage or charge higher prices to people with pre-existing conditions, and they typically do not cover medical services related to a pre-existing condition.
Short-term plans are likely to offer healthier people lower premiums (because the plans include reduced benefits and cover less costly populations), and thus will lure healthy enrollees away from the individual and small-group markets and leaving a costlier group behind. This dynamic, known as adverse selection, would raise premiums for traditional, more comprehensive health coverage and undermine ACA protections for people with pre-existing conditions. Meanwhile, healthy people who enroll in these plans may find themselves facing gaps in coverage and exposed to catastrophic costs if they get sick and need care.
But even with today's federal rule changes, states have the authority to set their own standards for short-term plans. To date, the following states have acted:
* In Maryland, a new law, passed on a bipartisan basis and signed by Republican Governor
* A new
*
* The
Other states are also making progress.
Other states have warded off efforts to expand short-term plans, at least so far. In
Before the recent flurry of activity, three states --
Even as the
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