Trump: Less Insurance, Lower Premiums 02/21 06:16
WASHINGTON (AP) -- The Trump administration Tuesday spelled out a plan to
lower the cost of health insurance: give consumers the option of buying less
coverage in exchange for reduced premiums.
The proposed regulations would expand an alternative to the comprehensive
medical plans required under former President Barack Obama's health law.
Individuals could buy so-called "short-term" policies for up to 12 months. But
the coverage would omit key consumer protections and offer fewer benefits,
making it unattractive for older people or those with health problems.
The plans would come with a disclaimer that they don't meet the Affordable
Care Act's safeguards, such as guaranteed coverage, ten broad classes of
benefits, and limits on how much older adults have to pay. Insurers could also
charge more if a consumer's medical history discloses health problems.
Nonetheless, administration officials said they believe the short-term
option will be welcomed by people who need an individual health insurance
policy but don't qualify for the ACA's income-based subsidies.
Those in this largely middle-class crowd make too much for subsidies and
have absorbed years of price hikes. Some say they now face monthly,
mortgage-size payments of well over $1,000 for health insurance. Then they
usually have to pay a deductible of several thousand dollars. Research
indicates the uninsured rate among these customers is growing.
"If you are not subsidized, the options can be really unaffordable for
folks," Health and Human Services Secretary Alex Azar told reporters. The
administration estimates monthly premiums for a short-term plan could be about
than one-third of what a comprehensive policy costs.
Democrats swiftly branded it a return to "junk insurance," and the main
insurance industry lobbying group said it was concerned the Trump plan could
divide the healthy from the sick in the market and make it more expensive to
cover those with health problems.
Democrats say the solution is to increase government subsidies, so that more
middle-class people will be eligible for taxpayer assistance to buy
comprehensive coverage. The Obama administration had limited short-term plans
to periods of no longer than three months, making them impractical for many
"We shouldn't be in the business of providing people with worse care," said
Sam Berger, a former Obama aide now with the liberal Center for American
Progress. "What we should be focusing on is finding ways of reducing the cost
of high-quality care."
Trump administration officials reject the notion that they're trying to
undermine the ACA. Instead, they say they are trying to make things more
workable for people who are not being helped by the health law.
The administration estimates that only about 100,000 to 200,000 people will
drop coverage they now have under the ACA and switch to cheaper short-term
policies. They also say they expect short-term plans could attract many people
among the estimated 28 million who remain uninsured.
"What we see right now is that there are healthy people sitting on the
sidelines without coverage, and this is an opportunity to provide them with
coverage," said Seema Verma, head of the Centers for Medicare and Medicaid
Services, which also administers the Obama-era health law.
A government economic analysis that accompanied the proposal forecast a
moderate increase in premiums among customers sticking with their ACA plans
through HealthCare.gov. Because subsidies are tied to the cost of premiums,
taxpayers would end up spending more.
Administration officials said there's no final decision on whether consumers
will have a legal right to renew coverage under one of the new short-term plans.
One major health insurance company, United Healthcare, is already
positioning itself to market short-term plans.
But others in the industry see them as a niche product for people in life
transitions, like being in-between jobs, moving to another state, or retiring
before Medicare kicks in.
"I certainly wouldn't recommend them to someone receiving a significant
subsidy or who has ongoing health issues, but there are certain times and
certain places where it makes sense," said Jeff Smedsrud, an insurance
entrepreneur whose companies sell short-term plans.
Consumer advocates say customers should read the fine print carefully to
make sure the plan will cover their expected bills.
The administration's proposal will be open for public comment for 60 days.
Plans would be on the market later this year.
However, short-term coverage won't count as qualifying coverage under the
Obama health law for 2018. That means consumers with such plans would legally
be considered uninsured, putting them at risk of fines. That wouldn't be a
problem next year, when repeal of the ACA requirement that most Americans have
coverage takes effect.
Tuesday's proposal follows another administration regulation that would
allow groups to offer "association" health plans also exempt from ACA
requirements to small businesses and sole proprietors. Having failed to repeal
"Obamacare," Trump is now chipping away at it through regulations and waivers.
The plan doesn't affect people with job-based coverage, still the mainstay
for workers and their families.