Access to Short-term Health Plans Expands / by Joe Furia

Debbie Johnston, Senior Vice President of Policy Development

Last week the departments of Health and Human Services, Labor, and the Treasury issued a final rule that will allow consumers to buy short-term health plans to provide coverage for up to 36 months. These limited duration plans are not required to comply with federal requirements for individual health insurance coverage, such as essential health benefits, coverage of pre-existing conditions or the requirement to sell to any consumer regardless of health status. While these products may be appealing because of their cheaper price tag, they could end up costing a patient far more by covering fewer benefits and health conditions—which could result in an increase in medical bankruptcies. Policy experts also believe these plans will increase provider bad debt and undermine the individual insurance market by attracting younger, healthier people away from the current risk pool and driving up the costs for those that remain. It is estimated that about 600,000 Americans will newly enroll in a short-term health plan under the rule, increasing federal spending on marketplace subsidies by $0.2 billion in 2019 and $28.2 billion over ten years.