As the costs on the individual market continue to reach for the skies, more people have begun to eye alternative options that might have a cheaper price tag.
Those who don’t get subsidies — which protect people with lower incomes from the rising costs on the Affordable Care Act’s exchanges — might welcome the proposed regulations by President Donald Trump’s administration to make short-term health plans a more viable option by letting people buy them for a year rather than just a few months.
But while they may come with a smaller cost, they don’t come with much else.
Short-term plans have historically been used when people have an unexpected gap in coverage, like if they lose their job or right after a recent graduate has left school. They’re not required to comply with the same requirements imposed on traditional plans under the ACA.
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That means they don’t do a lot for the consumer.
“These policies don’t cover people with pre-existing conditions,” said Rick Mayes, a professor of public policy in the University of Richmond’s Department of Political Science. “These policies don’t cover a lot of things — pharmaceutical costs, they don’t cover maternity care, they don’t cover preventive services.”
A new Kaiser Family Foundation analysis shows that most of these plans don’t cover substance abuse treatment or outpatient prescription drugs, 43 percent do not cover mental health services, and none covers maternity care.
Younger, healthier people who can look ahead with relative certainty on a year without a major health crisis might feel comfortable gambling on a plan that doesn’t cover any pre-existing conditions and can charge them higher premiums based on their health status, gender or age.
But those plans aren’t an option for many who still depend on the individual market. In the Richmond area, for example, many of those who purchase on the individual market have retired before their Medicare benefits kick in, so they’re still looking for robust, affordable health insurance.
Some in the health care world have expressed concerns that allowing people to leave the individual market to buy a short-term plan will cause costs to rise even more. They worry healthy, young people will leave for a cheaper plan and the insurers will be left with only those with more health conditions.
But Mayes said he suspects the new regulations will mean that the millions who forego insurance and pay the penalty instead will now be enticed into buying a cheaper short-term plan.
“It’s not a great option; it’s just better than going uninsured,” he said.
He added it addresses claims that some parts of the country have absurdly expensive individual market plans, running up to $1,000 a month with a $10,000 deductible. For people there, these short-term plans could help — but not if they have a pre-existing condition, of course.
But he warned that there aren’t many regulations overseeing these plans, and that all the power often rests with the insurer not only to charge what they will but also to pocket whatever profit they want. The 80/20 rule that applies to all ACA plans — so they must pay the 80 percent of premium dollars on health care costs and, if they don’t reach that, rebate the member — doesn’t apply to short-term plans.
And they’re also not going to fix the inherent problems with health care in the U.S., where costs across the board are skyrocketing.
“So these plans aren’t the devil, they’re not going to destroy the exchanges, they serve a certain purpose,” Mayes said. “But ... they’re another Band-Aid on a health insurance system that no one would ever create if you could start from scratch.”
