Fourteen Senate Republicans sent a letter to Health and Human Services Secretary Tom Price on Thursday, asking him to reverse an Obama-era regulation that places restrictions on short-term limited duration (STLD) insurance plans, also called short-term insurance. The Obama-era regulation was meant to safeguard the Affordable Care Act (ACA) health exchanges by penalizing patients who purchased short term insurance as a type of primary coverage — thus protecting the risk pool.
If Price weakens this regulation, healthier patients could opt out of the state exchanges and purchase short term insurance plans for the long term. Without healthy people enrolled to offset those who are sick, the health care exchange takes a significant hit.
When ThinkProgress reached out to the Department of Health and Human Services for comment, spokesperson Alleigh Marré said they’ve “received the letter and will respond.”
It seems likely that Price will take the senators’ advice to reverse the penalties on short-term coverage. During a House hearing in March, he said he was intent on dismantling parts of the ACA within his purview. Last week, the Centers for Medicare and Medicaid Services posted a request for information at the Federal Register, seeking comment from interested parties who are looking to reduce regulatory burdens from the ACA.
Short term insurance is meant to bridge gaps in coverage, like if a patient is between jobs or waiting for benefits to begin at a new job. Patients on short-term plans get covered fast and can later drop that coverage with no penalty. These plans also tend to be cheaper than plans offered on the exchanges.
“But only because people get lousy coverage,” Timothy Jost, a law professor and health-policy expert at Washington and Lee University, told ThinkProgress. “[Short term insurance] looks great when you go to buy it and looks a lot less great when [you] try to use it.”
An acquaintance recently asked Jost about purchasing a short term insurance plan, he said. When Jost asked him to look at the consumer rating, the acquaintance discovered that the plan received a one-point rating, out of a possible five, from an average of 66 ratings.
Short-term insurance plans aren’t required to cover the 10 essential benefits, an ACA staple. As a result, this type of insurance does not supply the kind of coverage people with preexisting conditions need. That’s why customers are not allowed to enroll in short-term plans for more than 90 days, under the Obama-era regulation.
But the 14 Senate Republicans who wrote the letter to Price say that reversing this rule supplies consumers options. Larry Levitt of The Henry J. Kaiser Family Foundation suggested that GOP members could advocate for short term insurance as primary insurance in counties where insurers withdrew from the Obamacare marketplaces.
It wouldn't surprise me to see short-term policies emerge as a way of dealing with "bare" counties. This could work…for healthy people.
— Larry Levitt (@larry_levitt) June 8, 2017
Jost pointed out that the letter cites eHealth or Health Insurance Innovations in the footnotes. eHealth or Health Insurance Innovations promote short term insurance, and according to Axios reporter David Nather they’ve lobbied hard on Capitol Hill to reverse the Obama-era rule. “That’s who probably wrote the letter,” said Jost.
The Trump administration has been destabilizing the ACA health exchanges all on its own by not saying whether it will enforce the individual mandate or if it will pay cost-sharing reduction payments to insurers.