The Trump administration has finalized a rule to allow insurers to sell short-term health insurance plans for up to 12 months, a controversial move that has been criticized by the industry.
The final rule issued on Wednesday by the Departments of Health and Human Services, Treasury and Labor requires insurers to include certain language to help consumers understand what is included in short-term limited-duration plans, which offer much skimpier coverage. The plans can skirt Affordable Care Act requirements around preexisting conditions and essential health benefits.
Previously, under the Affordable Care Act, short-term plans were limited to three months. Under the new rule, the 12-month plans can be renewed for up to 36 months. HHS officials have argued that the move would expand coverage choices for consumers by offering lower premium plans.
“Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle,” HHS Secretary Alex Azar said in a statement. “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
HHS cited statistics from 2016 when the average short-term plan premium was $124 compared to $393 on the exchanges.
Healthcare organizations and lawmakers have roundly criticized the move as a way to sabotage the ACA marketplace arguing the plans will siphon off healthier consumers and drive up exchange premiums.
Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma initially said the impact on ACA plans would be minimal pulling just 100,000 to 200,000 consumers off the exchange. But a CMS actuary disputed that figure, indicating that as many as 800,000 short-term plan purchasers would come from the ACA.