The Trump administration moved Wednesday to expand health insurance options and affordability for Americans, with a new rule allowing cheaper new and renewable health insurance plans that consumers can use for up to a year.
The Department of Health and Human Services, Labor Department, and Treasury Department released the final rule that allows consumers to buy “short-term, limited duration” health insurance plans that are not subject to the Obamacare requirements. Consumers can have the plans for up to a year, instead of three months under the new rule.
The average monthly premium for an individual with a short-term plan in the fourth quarter of 2016 was $124, compared to $393 for an unsubsidized plan in the Obamacare exchange, according to HHS.
“They can be as much as 50-80 percent lower cost than the Affordable Care Act exchange plans,” Secretary of Health and Human Services Alex Azar told reporters Wednesday. “We believe this could provide relief for well over 1 million people.”
The new rule is largely a return to the existing rule before 2017, when Americans could keep the plans for almost a year, which changes as President Barack Obama was heading for the exit. To encourage more people to join the exchanges, Obama reduced short-term limited duration coverage to less than three months in an executive action just three weeks before leaving office.
The plans again cover an initial period of one year, as before Obama’s action. The difference is that the plans come with a renewable maximum period of no longer than three years.
Azar said he would like to see Congress repeal and replace Obamacare, but until then, he is going to work to expand more private choices for consumers. He said this would not undermine the Obamacare exchanges, where 87 percent of consumers are subsidized. But this does offer a choice for those who don’t qualify for subsidies, he said.
“If someone decides, ‘I’m paying too much for insurance I don’t value that gives me an inadequate benefit and I find what you allow to be offered here in the short-term, limited duration plans to be something that is more financially attractive and more attractive as a health benefit for me in terms of coverage,’ that type of voting with their feet, I would find quite meaningful,” Azar told The Daily Signal during the press conference Wednesday.
Azar also noted during the press conference the new rule requires more consumer notification of what the cheaper, short-term plans won’t cover.
“These may be a good choice for individuals, but they also may not be the right choice for everybody,” Azar said. “One of the things we are doing is requiring consumer protection notice on the plans. In fact, it’s a more robust notice than President Obama’s administration had on these very same plans to ensure the patient, the consumer, knows going in what they are getting and what they’re not getting through the plan.”
Beyond that, the plans will remain under state regulation, which can decide benefit or rate structure.
The low-cost, sometimes low-coverage, plans could be good for people transitioning from one job to another, students who anticipate a job but aren’t yet employed, independent contractors, and part-time workers, Azar said.
The administration has taken a strong step, but Congress should also act, said Marie Fishpaw, director of domestic policy studies at The Heritage Foundation.
“The Trump administration is right to provide more options to Americans who have suffered under Obamacare and, in many cases, been priced out of health coverage,” Fishpaw said in a statement. “States should have more authority to regulate short-term, limited duration health plans. Unwinding Obamacare’s damaging regulations is just the first step.”
President Donald Trump signed an executive order in October directing executive branch agencies to look for ways to increase choice and competition in the health care market.
A release of three recent reports by the Centers for Medicare and Medicaid Services found enrollment in the Obamacare exchanges is only stable for subsidized consumers, but has declined by 20 percent for nonsubsidized consumers. Meanwhile, premiums increased by 21 percent.
“We continue to see a crisis of affordability in the individual insurance market, especially for those who don’t qualify for large subsidies,” CMS Administrator Seema Verma said in a written statement. “This final rule opens the door to new, more affordable coverage options for millions of middle-class Americans who have been priced out of ACA plans.”
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