Trump Administration Proposes Extending Short-Term Health Plans to 12 Months

The Trump administration on Tuesday proposed extending the time period that Americans can stay in short-term, limited-duration insurance plans from 3 months to 12 months, following an executive order issued last October.

The administration claims that the proposed changes are intended to provide affordable coverage options for individuals and families that cannot afford premiums for policies that meet the full requirements set by the Affordable Care Act (ACA), such as 10 essential health benefits and other care.

When President Trump first issued his executive order in October 2017, the Commonwealth Fund released an analysis showing that short-term health plans discriminate against patients with preexisting conditions and have high cost sharing and less extensive insurance coverage. The plans were previously shortened from 12 months to 3 by federal regulators in part because they were causing adverse selection in who purchased insurance (ie, healthier people were opting for the skimpier plans), which skewed insurance premiums for everyone.

Originally intended for people who are between jobs or other sources of insurance coverage, the announcement said the extension is aimed at people who “who find ACA coverage too expensive or have seen their health insurance choices diminish; and whose doctors are not in network under ACA plans.”

The administration also said the 12 month plans would also reduce the risk of a gap in coverage. Under current rules, a person who becomes ill would likely not qualify for another plan less than 3 months in duration because of the illness and would then need to wait without coverage until the next year to gain coverage in the individual market. The administration said it is designed to provide temporary coverage for individuals transitioning between healthcare policies.

“Americans who find themselves between jobs or simply can’t afford coverage because prices are too high will be helped by President Trump’s Healthcare for All Executive Order,” said CMS Administrator Seema Verma in a statement. “In a market that is experiencing double-digit rate increases, allowing short-term, limited-duration insurance to cover longer periods gives Americans options and could be the difference between someone getting coverage or going without coverage at all.”

The industry group representing payers voiced some worry about the proposal.

"While we are reviewing the proposed rule to understand its impact on the people we serve, we remain concerned that expanded use of short-term policies could further fragment the individual market, which would lead to higher premiums for many consumers, particularly those with pre-existing conditions," said Kristine Grow, senior vice president, communications, for America's Health Insurance Plans.

House Democrats, however, were furious. In a joint statement, Energy and Commerce Ranking Member Frank Pallone Jr (D-New Jersey), Ways and Means Ranking Member Richard Neal (D-Massachusetts), and Education and the Workforce Ranking Member Bobby Scott (D-Virginia) said that the proposal "is the latest step in their ongoing effort to sabotage our nation’s healthcare system. Today’s action will leave families on the hook for thousands of dollars in uncovered healthcare costs and allow insurers to once again discriminate against individuals with pre-existing conditions. Widespread marketing of these bare bones, junk plans will further destabilize health insurance markets, and will lead to higher premiums for everyone."

CMS will accept comments on the proposed rule for 60 days.