America's Health Insurance Plans asks for 6-month ceiling on short-term, limited duration plans

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Shorten the duration of short-term limited duration insurance from one year to six months. That's the recommendation from incoming America's Health Insurance Plans President and CEO Matt Eyles to Health and Human Services Secretary Alex Azar.

Monday was the deadline for stakeholders to submit comments on the proposed rule to lengthen the time period for short-term limited duration plans from three months to a year.

Short-term plans have been used as transitional health insurance, but in the rule posting, the Centers for Medicare and Medicaid Services said healthier individuals would leave Affordable Care Act coverage and sign up for these one-year plans because of the lower premiums they can offer.

Short-term plans have traditionally represented a small fraction of the health insurance market, CMS said in the rule. However, if finalized, the rule would encourage more consumers to purchase this type of insurance, including those who were previously enrolled in the ACA market. 

Insurers would see an increase in premium revenues and profits because the policies will be priced by actuarial value that considers risk, CMS said.

But insurers don't support short-term plans as a replacement for comprehensive coverage, according to Eyles. 

The short-term limited duration plans would not need to follow ACA requirements for essential benefits and could deny coverage to individuals who have preexisting conditions, he said.

This would leave sicker, riskier individuals in the ACA market, driving up those premiums.

While insurers recognize that Americans who buy their own coverage need more affordable options, particularly if they do not qualify for federal subsidies, AHIP believe that states should have primary responsibility for managing their individual markets, Eyles said.

"At the same time, we are concerned that this proposed rule will lead to more people being uninsured and underinsured, and to higher costs in the long run," Eyles said. 

Short-term plans may also not cover preventive care, prescription drugs, mental healthcare or treatments for chronic health conditions such as diabetes or heart disease. They may also impose annual, lifetime or daily limits on coverage and could leave a consumer without coverage until the next open enrollment period when the short-term plan ends.

"We urge the Administration to limit the duration of short-term plans to six months, ensure clear disclosures to consumers about what short-term plans do and do not cover, and inform consumers of the potential availability of discounted coverage through the marketplace," Eyles said 

The proposed rule for individual coverage lengthening the duration of short-term plans to a year followed an executive order from President Trump in October 2017, to promote healthcare choice and competition. 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com