Sworn enemies of the Affordable Care Act system are hoping the new Trump administration short-term health insurance proposal will shred ACA individual market rules.
ACA supporters say implementing the new draft regulations as written could push many people to replace high-quality major medical coverage with junk coverage.
The proposal could bring back something like the short-term health market that existed in 2016, the analysts predict.
The analysts size up the proposal in the introduction to the new proposed regulations.
The Trump administration is preparing to publish the draft regulations in the Federal Register on Wednesday.
A preview copy of the draft regulation packet is available here.
Here are seven proposal highlights, drawn from the packet.
1. The proposal is just a draft.
Officials at EBSA, CMS and the Internal Revenue Service developed the draft in response to an executive order that President Donald Trump issued in October.
In that order, Trump asked officials in his administration to try to eliminate regulatory obstacles to use of interstate association health plans, health reimbursement arrangements, and short-term health insurance.
Officials note in the introduction that the draft must still go through a public comment process.
2. The proposal would repeal a limitation that the administration of former President Barack Obama imposed on short-term health insurance issuers in 2017.
Before 2017, the federal government required only that a short-term health insurance policy last less than a year.
Some states shut short-term health insurance policies out. Some let the same issuer cover the same insured for up to 364 consecutive days.
Drafters of the Affordable Care Act included a provision that exempted short-term health insurance, and other products that traditionally fell outside the scope of either ERISA or the Health Insurance Portability and Accountability Act of 1996, from ACA major medical insurance requirements.
The ACA now, in most cases, requires an issuer of new individual major medical coverage to cover at least about 60% of the actuarial value of a standard “essential health benefits” (EHB) package that includes hospitalization benefits, physician services benefits, maternity benefits, and behavioral health benefits. An issuer subject to the ACA must cover the EHB benefits without imposing any annual or lifetime maximum on coverage for those benefits.
The issuer of new, ACA-compliant individual coverage cannot consider any factors other than age, location and tobacco use when deciding whether to issue coverage, or when deciding what price to charge.
Former President Barack Obama (Photo: White House) Because issuers of short-term health insurance are exempt from the ACA, they can, under federal law, decide which services to cover; set annual and lifetime caps on benefits; and use medical underwriting.
Many states have set strict requirements for short-term health insurance issuers’ benefits and underwriting practices, but some haven’t.
Some major medical coverage issuers, state insurance regulators and health policy specialists argued that federal regulators had to put new limits on short-term health insurance, to keep short-term health issuers from using their freedom from ACA rules to lure young, healthy adults away from the individual major medical market with cheap, skimpy coverage.
The Obama administration obliged in early November 2016. The administration limited the duration of any new short-term health insurance policy sold after March 31, 2017, to three months or less, to reduce the odds that consumers would try to use short-term health insurance as a year-round alternative to major medical coverage.
The new Trump administration draft regulation would lift that three-month federal short-term health insurance duration cap.
Under federal rules, a short-term health insurance policy could stay in effect up to 364 days and still be considered a short-term health insurance policy.