Demand for popular short-term insurance plans could surge under Trump Executive Order
Short-term health plans have been around for decades, bridging coverage gaps for people who are between jobs or have recently graduated from school, among other things.
After the health law passed, some people gravitated toward them because they were willing to trade comprehensive coverage for a cheaper sticker price – even if it meant paying a tax penalty for not having the comprehensive coverage required in the law. Sales increased.
Now, as Republicans look for ways to weaken the health law’s coverage requirements and explore the possibility of not enforcing the requirement that people have health insurance, short-term plans may be poised to grow even more.
As their name suggests, short-term plans provide coverage for a limited period of time, often six months or less. They generally don’t cover such things as preexisting conditions, maternity services or prescription drugs. However, when combined with other coverages these plans meet the needs of most healthy health insurance buyers.
When the health law passed, insurers increasingly began offering short-term plans that stretched the definition of “short,” sometimes providing coverage for as long as 364 days.
“Carriers were exploiting a loophole in the law that defined a health insurance plan as one that was 365 days,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. “If they were shorter, they didn’t have to comply with ACA protections.”
Short-term plans serve a tiny but growing proportion of the roughly 22 million people who have coverage on the individual market. At the end of 2013, before the health law’s major reforms took effect, there were approximately 108,800 people covered by these policies, according to figures from the National Association of Insurance Commissioners. Two years later, roughly 148,100 people had short-term plans.
Some insurers have taken notice. Online health insurance agency Health Life Dental Insurance was one of the pioneers in this space.
“These short-term coverages, when combined with packages of other protections to maximize your coverage, provide more economical protection without the high deductibles that are part of the ACA,” said Mark Deschenes, General Agent and President of Health Life Dental Insurance. “It’s almost like the old individual market before the ACA.”
“Our approach is to combine several coverage packages to protect people when unforeseen events occur such as a car accident or a cancer diagnosis. With a short-term plan, if you get sick or you’re in the hospital when your plan comes up for renewal, it won’t be renewed,” Deschenes said. “but we combine other types of insurances together so that those circumstances, should they arise, are properly covered.”
Last October, the Obama administration issued a final rule that would make it more difficult for consumers to buy short-term plans to substitute for regular Obamacare plans. Recognizing the challenge created by that ruling, Deschenes and his agency went to work to successfully develop a program that provides the high value insurance programs that they have become known for.