A new health insurance rule from the Trump administration is being criticized by the Pennsylvania Insurance Department. The agency said the policy, issued Wednesday, would jeopardize those who buy health insurance on the individual market.
People will soon be able to purchases short-term, limited duration (STLD) health plans for up to three years. Federal regulations currently limit STLD to three months in length.
STLD plans are cheap, but don't comply with the Affordable Care Act's consumer protection and coverage requirements. Because the individual mandate was repealed earlier this year, starting in 2019 consumers can choose to purchase no insurance or opt for a bare-bones STLD without paying a penalty.
Insurance Department Commissioner Jessica Altman said she’s concerned the new STLD policy will result in people not having the coverage they need. For example, these plans can deny coverage or charge more for pre-existing conditions. STLD can also have lifetime or annual limits, which might be problematic for someone who experiences a high-cost medical event like a serious accident or stroke.
"It's more like a coupon, than true insurance," she said. "It's easy to forget what the real, true cost of care is in this country, and unfortunately it’s incredibly expensive."
Eric T. Roberts, who specializes in health policy at the University of Pittsburgh, said he agrees with Altman's assessment.
"I've even heard the term that you can buy these plans in 'four-packs,'" he said. "These are the types of policies that you might get if you're travel or have a small break in insurance coverage."
Roberts said this change might also hurt those who buy insurance on the individual ACA market because young and healthy people are more likely to select STLDs over Obamacare.
"If only sick people enter the individual market place, premiums become completely unaffordable," he said. “As the market become smaller and potentially more adversely selected, coverage will become much more expensive and potentially inaccessible.”
Proponents of this change argue an increase in choice is good for consumers. Jason Miller, 31, of Bairdford said he might go with an STLD because since he hardly uses his insurance.
"[I] pay too much for a pretty crappy plan," he said. "[A STLD] is definitely something I'm going to look at."
Health insurance rates have already been set for 2019, so Obamacare market prices won’t be impacted by STLDs until 2020.