President Trump directed the Labor Department on Thursday to look at rules in the Affordable Care Act blocking the sale of “short-term limited benefit” policies.
These policies don’t cover essential benefits required by the ACA, like coverage of pre-existing conditions and maternity care. The benefit for consumers is they are inexpensive.
The Affordable Care Act didn’t get rid of such policies. Instead, the law said those policies could only be bought as a short, stopgap option. For example, to provide coverage for three months between jobs.
But Trump’s executive order proposes making these limited benefit policies available full-time.
Jesse O’Brien, with the Oregon Public Interest Research Group, thinks that could threaten the long-term health of Oregon’s insurance marketplace.
“This executive order is a serious threat to the stability of the markets that Oregon families and small businesses rely on for health coverage,” O’Brien said, “because it really is opening the flood gates for various kinds of insurance that aren’t going to help people.
“It’s what I would call junk insurance,” he said.
O’Brien thinks many consumers might buy the plans because they’re cheap.
“But the reason that they’re cheap is that they’re not going to be there when you need them,” he said.
For example, the policies may not pay for an extended hospital stay following a car accident. Or they may pay for antibiotics, but not for more expensive chemotherapy drugs. That could mean consumers finding themselves facing overwhelming bills if they get sick, or refusing treatment and ending up in the ER, where hospitals and taxpayers foot the bill.
“People who have fewer serious health conditions are going to find these plans more appealing, because they’re going to be less worried about the skimpy benefits,” O’Brien said. “And the people who are left in the regular insurance market are more likely to be older and sicker which will just drive up costs for everybody in that market.”
Jake Sunderland with the Oregon Department of Consumer and Business Affairs said that initially the executive order will have no effect in the state.
“You’re going to see no change, no impact on your options for open enrollment for 2018,” he said.”There’s still going to be financial assistance for working families throughout the state to buy comprehensive health insurance.”
Open enrollment in Oregon runs from Nov. 1–Dec. 15.
Sunderland said it’s hard to know what the impact might be in the longer term, however. He thinks consumers are savvy enough to check benefits before trying to save a few dollars.
“These short-term plans exclude prescription drug coverage, they exclude maternity coverage, they exclude insurance for people over 64 or under 2 years old,” he said. “So they don’t really provide a lot of benefits. They’re not comprehensive insurance.”
Sunderland said consumers should make sure they read policy fine print.
The average Oregonian pays about $147 a month for their individual health insurance, after tax credits.
For the 2018 enrollment period, OPB found a short-term policy for a 30-year-old male for about $110 a month, and for a female at about $180 a month.
President Trump has also asked the U.S. Department of Labor to expand so-called “association health plans” for businesses.
These policies work by enabling small businesses in an industry to band together and negotiate for cheaper insurance.
Many people welcome the idea. Southwest Washington Republican Rep. Jaime Herrera Beutler said the programs are already popular in her state.
“Here in Washington state, association health plans currently provide roughly 400,000 individuals with quality, affordable health care plans,” she said in a press release, “and that’s despite these popular programs being undermined and restricted by our state’s Insurance Commissioner.”
Herrera Beutler said she’s worked for years to strengthen association health plans because they are critical to making good health care more attainable.
Jessie O’Brien with OSPIRG thinks associated health polices could lead to a cheap insurance that doesn’t offer much coverage.
“It may be cheaper, but may not be available to small businesses who have an older workforce or who have employees with expensive health conditions, that sort of thing,” he said.
In total, Trump’s changes could have a large impact on Oregon because 97 percent of businesses in Oregon are considered small.
The other question is whether any of the new policies that come out would be considered compliant with the individual mandate under the Affordable Care Act. The mandate currently requires a certain level of benefits.
If those policies aren’t compliant, they could be open to legal challenges.