ACP strongly supports the proposed rule, stating that enrolling in these plans leaves patients at risk of paying for insurance that will not cover health care needs
Sept. 22, 2023 (ACP) — The American College of Physicians strongly supports the Biden administration decision to no longer allow extended use of short-term health insurance plans, thereby limiting these plans to their original purpose of only providing temporary coverage.
“ACP was strongly opposed when the previous administration relaxed rules to allow for long-term use of what were meant to be short-term plans. Because the plans were only meant to be temporary stopgaps, they do not provide their enrollees with comprehensive coverage,” said Dr. Omar T. Atiq, president of ACP. “The plans are not required to comply with the Affordable Care Act (ACA) requirements on essential health benefit coverage, prohibition on preexisting condition exclusions, rate restrictions and other protections. Enrolling in a short-term plan leaves our patients at risk of paying for health insurance coverage that will not cover the health care they need.”
Currently, federal law allows the short-term plans to be extended for up to 36 months, according to healthinsurance.org. At a July 2023 briefing, President Biden announced that the administration is “issuing a new rule that would close the loophole that allows these junk insurance plans to exploit Americans.”
As he explained, “Under our rule, ‘short-term’ plans would have to be short-term. That means four months or less, not three years. Insurance companies would also be required to provide a clear disclaimer upfront about what's covered and what is not covered, instead of burying it in fine print.”
Specifically, according to healthinsurance.org, the proposed rule says initial insurance terms would be limited to four months — a three-month initial term with a one-month renewal period. Consumers would not be able to sign up with the same insurer over the next year. Some states have already restricted or banned the plans.
“They're traditionally used to fill in temporary coverage gaps, like when someone is between jobs and needs some coverage for a few months until they can get insurance through their employer,” explained Ryan Crowley, ACP senior associate for health policy. “Short-term plans aren't subject to a range of federal consumer protections and regulations. They aren't required to cover things like prescription drugs or behavioral health services, they can exclude coverage of preexisting conditions, and they aren't subject to mental health parity laws.”
Indeed, a 2018 report from KFF, formerly the Kaiser Family Foundation, revealed that 43 percent of short-term limited-duration plans did not cover mental health services, 62 percent did not cover treatment for substance use disorder, and 71 percent did not cover outpatient prescription drugs. None of the plans covered maternity care services.
In addition, Crowley said, “the plans may provide a false sense of financial security for people who buy them thinking they're getting good coverage. There's also evidence that people who may be eligible for subsidized coverage through the health insurance marketplace are being steered toward short-term plans instead. Some states have taken action to restrict these plans, but they've proliferated in a lot of areas.”
In a Sept. 11 letter to Xavier Becerra, secretary of the U.S. Department of Health and Human Services, ACP cautioned that reforming short-term insurance policies is just one step in what must be a larger effort to transform health care.
“Although ACP supports the proposed rule, we strongly encourage the administration to work with Congress, insurers, regulators and other stakeholders to adopt policies that reduce the cost of and achieve equitable access to comprehensive health coverage,” Atiq writes in the letter. “Many people who are not eligible for premium tax credits for qualified health plans offered through the Health Insurance Marketplaces are drawn to [short-term limited-duration] plans because they offer lower premiums. ACP strongly supported the Inflation Reduction Act's extension of enhanced premium tax credits through 2025 and recommends that they be made permanent.”
According to a September 2023 report by KFF, about 18 million people are enrolled in the Affordable Care Act individual marketplace, a record high. “In addition to Marketplace enrollees renewing coverage, uninsured people and those buying individual coverage off-Marketplace — as well as those losing Medicaid coverage as the pandemic-era continuous enrollment provision unwinds — may want to check if they are eligible for expanded subsidies under the Inflation Reduction Act,” KFF writes.
The Centers for Medicare & Medicaid Services accepted public comments on the proposed rule until Sept. 11, and any rule change will likely be finalized in late 2023, according to healthinsurance.org. If approved, the rules would apply to new short-term policies 75 days after the rule is finalized, and any policies issued before that date would not have to comply with the new rules.