Expansion of short-term insurance policies might mean increased premiums
The expansion of short-term, limited-duration insurance policies might mean a loss of coverage and an increase in premiums for some Illinois residents, according to a report released by the Urban Institute.
Urban Institute issued the 23-page report in February, which looked at the potential impact of STLD policies on insurance coverage, premiums and federal spending.
The report shows that premiums in Affordable Care Act-compliant nongroup insurance in Illinois could increase by 19.4 percent in 2019. The national average was projected to be 16.4 percent.
Under the current law with the expansion of STLD policies, there would be 403,000 Illinoisans with compliant nongroup insurance, which is a change of 39.1 percent from the prior law and 18.9 percent from the current law, according to the report.
With minimum essential coverage with the current law and with the expansion of STLD policies, there would be 157,000 people with STLD policies and 1,131,000 that are uninsured, bringing the total number of people without minimum essential coverage to 1,288,000 in Illinois, according to the report.
Under the current law with STLD policies, the number of uninsured in Illinois was 1,193,000 and under the prior law the number was 961,000, which is a change of 34.1 percent from the prior law and 7.9 percent from the current law.
Federal costs, however, would drop with the expansion of STLD policies in Illinois, according to the report. Total federal spending with the expansion would be $9,821,000, which is $13,000, or 0.1 percent, less.
Under the prior law, total federal spending would be $8,864,000 and under the current law without STLD policies, total federal spending would be 9,834,000, according to the report.
For those with Affordable Care Act-compliant health insurance coverage and are eligible for premium tax credits under the Affordable Care Act, higher premiums would translate to higher premium tax credits per enrollee paid by the government, according to the report.
Urban Institute estimates that Affordable Care Act-compliant private nongroup coverage would fall by 2.1 million people total in the United States in 2019 from the expansion of STLD policies alone. Across the board, 9 million fewer Americans would have minimum essential coverage than compared to the prior law.
On Feb. 20, the proposed regulation to expand STLD policies was announced by the Departments of Treasury, Labor and Health and Human Services.
STLD policies previously had a maximum length of three months, and the proposed regulation would expand that maximum to one year.
STLD policies do not have to abide by regulations set out in the Affordable Care Act concerning annual and lifetime benefit limits, coverage for essential health benefits and typically don't cover pre-existing conditions, according to the report.
If the proposed regulation is implemented, it would mean STLD policies could complete with ACA-compliant plans.
Because STLD plans do not meet essential coverage standards under the Affordable Care Act, they are not considered private insurance, according to the report.
Illinois is one of 43 states that do not prohibit or limit short-term insurace plans.