Preexisting conditions just one of many protections at risk under short-term health plans

By / 8.3.2018

President Trump promised Americans cheaper and better health care than what is provided under the Affordable Care Act (ACA). Yet his latest move, to expand access to short-term, limited-duration health plans, may make insurance cheaper but far from better.

These short-term plans have existed under the ACA as a short-term stop-gap measure for people in transition, traveling, or who fall into some gap of ACA coverage (i.e. in states that didn’t expand Medicaid). But now, the Trump administration wants to treat these plans, which are exempt from ACA rules and protections, as long-term solutions that will be renewable for up to three years. These plans can charge more for people with preexisting conditions, deny coverage of certain essential health benefits and have annual caps on coverage.

We all want cheap health insurance – until we get sick. Then we want our health plan to pay for the care we need to get well again. These plans are cheaper, until you need them. Then you’ll be on the hook for your health care costs.

The Kaiser Family Foundation found that of short-term plans currently on the market, 71 percent did not cover outpatient prescription drugs, 62 percent did not cover mental health services, and no plan covered maternity care. Of the plans that covered these services, most had strict benefit limits, such as a $3,000 limit on prescription drug coverage.

Insurance plans with skimpy benefits were what led to the ACA. So many consumers were left with limited coverage when they got sick or were denied coverage because of a preexisting illness. Congress passed the ACA to regulate the market and mandate that products sold as ‘insurance’ meet certain requirements – such as the covering of essential health benefits and not charging more for preexisting conditions.

And voters continue to support protections for preexisting conditions. A Kaiser Health Tracking Poll found that “a candidate’s position on continuing protections for people with pre-existing health conditions is the top health care campaign issue for voters, among a list of issues provided.” Support for these protections cuts across demographics: most Democratic voters (74 percent), independent voters (64 percent), and voters living in battleground areas (61 percent) said that a candidate’s position on protections for preexisting conditions “is either the single most important factor or a very important factor in their 2018 vote.” Roughly half of Republican voters reported the same.

Unfortunately, what is likely to happen when these products are treated as regular plans, is that healthy people ineligible for subsidies will take the risk that they won’t get sick and need comprehensive coverage. Pulling this population out of the ACA individual market means that only people eligible for subsidies and the sicker people that need comprehensive coverage will stay. This drives up costs for the population already most vulnerable in the changing individual market: people with preexisting conditions and ineligible for subsidies.

It is true that protections for people with preexisting conditions contributed to increased costs in the individual market, but there are other policies – such as increasing subsidies, passing a comprehensive reinsurance program, expanding Medicaid in all states, and curbing cost growth – that could help bring down costs.

Allowing insurers to sell stop-gap short-term insurance that doesn’t cover consumers when needed is a bad way to reduce health care costs. For those who never get sick, it could work. But if anyone gets an unfortunate diagnosis, gets pregnant, or breaks a bone in a sporting event, they may not be covered. And paying for your care out of pocket is, after spending hundreds of dollars on insurance, never cheap.