The Trump administration has proposed a rule to allow short-term policies to provide longer coverage.
Trump’s proposal regarding short-term policies could drive health plan premiums skyward. Older American adults would be the most affected by this change. The proposal involves allowing 364 days of coverage instead of the current cap at 3 months.
Short-term health policies typically come with smaller premiums than full one-year plans
The short term policies are sold not through the Affordable Care Act (ACA) insurance exchanges. They come with lower health plan premiums because they don’t need to comply with ACA minimum coverage requirements.
Currently, there is a 3 month cap to the length of those short term policies. The goal is to ensure that if someone needs coverage for longer, they will buy a full one-year health plan. This helps to make sure that anyone receiving health insurance for any length of time will obtain the full coverage mandated by the ACA. It makes sure the consumer is properly covered and the ACA is adequately supported with premiums that help to keep everyone’s coverage affordable.
Trump wants to extend the allowable length of time, which may drive health plan premiums skyward.
AARP data indicates that if Trump’s rule is adopted, older Americans will pay considerably more. In fact, a 60 year old covered by an ACA health plan may find his or her premiums spiking by around $1,000 to $4,000 per year, said AARP, based on 2019 predictions. On average, older Americans will need to pay $2,000 more for their health insurance.
The rule was jointly proposed by a number of federal agencies as a result of a 2017 directive from President Trump. The purpose of that directive was to give Americans more options for affordable health care coverage.
However, critics state that the combination of this rule with the elimination of the non-coverage penalty in 2019 will skyrocket health plan premiums. They caution that young and healthy consumers will start leaving the ACA insurance exchanges. Short-term health insurance provides limited medical coverage. They are typically not available to people with pre-existing medical conditions.
“It creates a situation where older Americans and people with pre-existing conditions are left in the ACA marketplace, and that would make their premiums go up,” said AARP federal health and family team director, Megan O’Reilly.