Urban Institute: Short-term plan expansion would boost premiums for ACA plans by 18% in 2019

The Trump administration's efforts to expand short-term insurance plans could lead to significant premium hikes for Affordable Care Act exchange plans, a new analysis suggests. 

The Urban Institute estimates that premiums for 2019 ACA plans could jump by 18.2% on average in the 43 states that allow or do not limit short-term plans. The report estimates that 2.5 million people would leave the ACA exchanges for the less comprehensive short-term plans, which are not required to meet ACA standards such as essential health benefits coverage. 

The Department of Health and Human Services issued a proposed rule last week that would expand the coverage window for these short-term plans to 12 months. The Obama administration limited their duration to three months. 

Expanding short-term insurance plans is among a number of policy changes detailed in an executive order President Donald Trump signed in October. The Department of Labor proposed in January expanding association health plans, another change noted in the executive order. 

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The Urban Insitute estimates that 4.2 million people would enroll in short-term plans in 2019, including 1.7 million who would have been uninsured otherwise. HHS' estimate was far more conservative, suggesting that just 100,000 to 200,000 people would leave the exchanges for the short-term plans.

In addition to leading to more people with minimal coverage, regulatory reforms enacted by the Trump White House over the past several months will lead to an additional 6.2 million uninsured people in 2019, for a total of 32.6 million without insurance, or about 12.5% of the non-elderly population. 

Recent policy changes, including the expansion of short-term plans and the rollback of the individual mandate, would also increase federal government spending by 9.3% in 2019, according to the report. 

Expanding short term plans is opposed by the Blue Cross Blue Shield Association and the America's Health Insurance Plans trade group, which have expressed concern that doing so would push healthier enrollees out of the individual marketplaces, driving up premiums. 

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Critics have slammed the rule for its impacts on the exchanges—The Washington Post's editorial board said the proposal harkens back to the "bad old days" before the ACA, when insurers had far more freedom to limit benefits and refuse to enroll people with pre-existing conditions. 

Bloomberg's editorial board said it will be up to states to prevent some of the worst potential outcomes of the proposal. States could regulate short-term plans more strongly, imposing shorter limits than those suggested by HHS and requiring the plans to include more robust benefits. 

"Sadly, people in states that won't provide this protection will be left waiting for leaders in Washington who will," the editorial concluded. 

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Alex Azar
Alex Azar (Wwsgconnect)

HHS Secretary Alex Azar defended the rule in an op-ed published by CNN, saying that expanding short-term insurance plans could be a boon for middle class families who are priced out of ACA insurance plans. 

Though he acknowledged that they're "not for everyone," he said short-term plans offer more options for people who may not be able to afford ACA exchange plans, who are between jobs or who can't find plans that cover the doctor of their choice.

Expanding the plans also fits more broadly into Trump and HHS' goals of reducing regulations, Azar said. 

"This isn't just about making sure individualized plans are available for Americans who need them," Azar said.

"More broadly, this administration believes that a competitive, affordable insurance market is going to come about by allowing insurers to respond to consumers—not by imposing edicts from Washington."