Proposal to expand short-term, limited duration insurance could hurt individuals in the long term
A proposed rule by the Trump Administration that expands short-term, limited-duration insurance (STLDI) plans could impact individuals in the long term.
Meg Murray, CEO of Association for Community Affiliated Plans, said the proposed law would mean cheaper insurance, but without the majority of benefits and with higher premiums.
Murray said a decade ago, people were getting insurance that turned out to not be good insurance because it didn't cover all the things they thought it might.
"People had lifetime limits and there were these things called rescissions," Murray said. "There were all these things in the marketplace that were undermining financial stability because people thought they had insurance, but it wasn't good insurance."
Murray said the Affordable Care Act (ACA) changed that, as insurance companies had to offer a robust set of benefits and they couldn't do rescissions, among other things.
STLDI plans, what Murray called "fake insurance" were to be used as a stopgap between long-term plans, like a spare tire is used when you are in the transition to getting a new tire for your vehicle--not a substitute for coverage.
The proposed rule by the Trump Administration would change STLDI plans from being used for only three months to being used for 12 months.
"We have been very concerned," Murray said. "This will bring back the bad, old days."
STLDI plans also do not cover pre-existing conditions and exclude multitudes of things.
Murray said many of these types of plans aren't even offered by health insurance companies, but instead are offered by other random insurance companies that don't know what constitutes good health insurance coverage.
"Healthy people will see these plans and think, 'well, I'm healthy and this is cheaper,' and that will leave those who are sick in the Marketplace," Murray said. "It will raise premiums in the Marketplace and will cause more people to be drawn to this fake insurance."
Murray's organization commissioned a study with Wakely Consulting Group that found that this proposed change would impact between 400,000 and 800,000 individuals just for the first year.
"These people will not be getting insurance and will be pulled out of this industry that is subject to the Affordable Care Act," Murray said.
The Wakely study estimated that premiums in the ACA-compliant market would rise to 12.8 percent and enrollment would drop by 26.3 percent.