Health insurance company executives and health insurance marketers are celebrating the Trump administration’s release of a new short-term medical insurance final rule.
The final rule, set to appear in the Federal Register Friday, will let in issuer offer short-term medical insurance with in initial term of up to 364 days.
With extensions, the coverage can last for up to 36 months.
Under former President Barack Obama, regulators had capped short-term medical insurance benefit periods at three months — to keep the products from peeling younger, healthier consumers away from the individual major medical market, and to reduce the possibility that consumers might end up with much less coverage than they expected, or need.
Estimates of the number of people who have some kind of short-term medical insurance now range from fewer than 200,000 to up to 1 million.
Although the market is small, policymakers see it as important, because a provision in the Affordable Care Act exempts “excepted products,” including short-term medical insurance, from the underwriting rules and benefits rules that now apply to major medical insurance.
In a state with friendly regulations and regulators, an issuer of short-term medical insurance can hold premiums down by rejecting applicants with even minor health problems, excluding coverage for services such as mental health care, and cap annual benefits at any level the market will bear.
The ACA won’t let an issuer of new individual major medical coverage do any of those things.
Short-term medical insurance market watchers are now racing to come up with forecasts of how the new regulations might affect the market.
Here are five (very) early answers.
1. Short-term medical insurance could end up in an interesting horse race with Affordable Care Act public exchange plan coverage.
The ACA individual major medical open enrollment period is set to start Nov. 1 and run until Dec. 15.
Jan Dubauskas, the chief government affairs officers at HealtheDeals.com, a web-based health insurance supermarket division of the IHC Group, points out that the short-term medical insurance regulations will actually take effect in October — right before the individual major medical open enrollment period begins.
2. Short-term medical insurance distributors are predicting that they’ll have the capacity to meet any surge in demand that materializes as a result of the lifting of the duration cap.
Gavin Southwell, the chief executive officer of Health Insurance Innovations Inc., a major short-term medical insurance distributor and the parent of the AgileHealthInsurance quote service, said adding new and updated short-term medical insurance products to the company’s existing systems will take just a few days.
Training agents and updating quality control efforts should also be a quick process, Southwell told securities analysts today, during a conference call.