As the Biden administration looks to make its mark on healthcare, one policy it is likely to overturn is President Trump’s 2018 executive order loosening rules for short-term health insurance policies, an effort to provide alternatives to Obamacare plans that Democrats described as sabotage.
While such policies account for a small part of the health insurance market, it is likely indicative of healthcare policy battles to come during the Biden administration, pitting liberal groups who want to defend and build upon Obamacare against conservative groups who want more free-market alternatives.
Also known as short-term, limited-duration insurance, it is health insurance that primarily fills the gaps in coverage that an individual may face when transitioning from one long-term plan to another, as may happen when a person is in between jobs.
Since such plans were supposed to offer only short-term coverage, they were not subject to the benefit mandates and other regulations under the Affordable Care Act. Fearing that healthier people were using such plans as a way to avoid paying higher prices on the ACA exchanges, in 2016, President Barack Obama issued an executive order saying that the plans could only offer three months of coverage and could not be renewed.
In 2018, Trump loosened those restrictions considerably, allowing short-term plans to offer coverage for up to one year and to be renewable for up to three years.
Short-term plans are not a large market. Jeff Smedsrud, CEO of Pivot Health, which sells short-term plans, estimates that about 700,000 people had such plans at any given point in time prior to the Trump executive order. After the order, he suggested, it grew to 900,000 to 1 million.
But that market could shrink under the Biden administration. Smedsrud thinks it’s likely Biden will roll back the Trump rule.
“It is likely the Biden administration will propose new rules, but it should only be after the COVID pandemic is under control and the Supreme Court has taken action [on the recent Obamacare case],” Semdsrud said. “Now is not the time to disrupt health insurance markets.”
Adding to the likelihood that it will be rolled back is that Biden’s pick for Health and Human Service secretary, California Attorney General Xavier Becerra, is a critic of the Trump order.
“This is just another attempt by the Trump administration to undermine the ACA and go back to the days of buyer beware health insurance,” Becerra said in 2018. “Short-term plans are not meant for primary coverage, but this rule would flood the market with stripped-down, junk health insurance plans that don’t provide the reliable, comprehensive coverage families need when an emergency occurs leading to bankruptcy.”
Since Trump loosened the rules for short-term plans, a debate between proponents of Obamacare and its critics has erupted over the quality of such coverage.
“These plans often leave consumers high and dry where they’re not paying medical expenses that consumers really need to have paid,” said Cheryl Parcham, director of access initiatives at the liberal FamiliesUSA. “People often buy them without understanding what they are getting. They exclude a lot of benefits that other plans are not allowed to exclude.”
An analysis by FamiliesUSA found that among eight insurers offering short-term plans, only half offered mental health coverage, and less than half offered substance abuse treatment. None covered overdoses.
But Chris Pope, a senior fellow at the conservative Manhattan Institute, disputed that.
“What opponents of the short-term market have done is say, ‘Well, it’s possible to find plans on the short-term market that are less generous than the ACA, therefore those plans are junk,’” Pope said. “Well, that inference doesn’t follow.”
His analysis found that in states that allowed short-term plans, about two-thirds of the plans offered mental health benefits, and about 40% offered substance abuse coverage.
Dania Palanker, an assistant research professor at the Center on Health Insurance Reforms at Georgetown’s Health Policy Institute, noted that short-term plans don’t have the protections that are required of ACA plans.
“Short-term plans will deny coverage to people with preexisting conditions,” Palanker said. “A lot of them don’t cover prescription drugs, and when they do, many of them limit it to $3,000 for the term of coverage. Additionally, about half of short-term plans have no provider network.”
Pope, though, says that short-term insurance markets offer plans with different levels of quality, and consumers can choose those higher-quality plans.
“The short-term market is more flexible, and the consumer gets to choose,” Pope said. “So if the consumer wants a very generous benefit package with very low cost-sharing, they can get that.”