New low-cost, short-term health insurance plans allowed by the Trump administration will be available in Maine this fall, but health care advocates say the plans won’t provide protections for pre-existing conditions and are filled with loopholes to avoid paying claims.
Mitchell Stein, a Maine-based health insurance consultant, said many of the short-term plans, which cost as little as $30 to $50 a month, are “junk insurance.” They don’t have to offer a prescription drug benefit or maternity coverage, for instance.
“The reason they’re cheaper is because they’re cheap,” Stein said. “People will buy these thinking they’re covered, but they’re not.”
The Trump administration unveiled new rules for short-term health insurance plans this month, the latest effort to undermine the Affordable Care Act, and the plans will likely be on the market by October. While the impact on Maine and the nation is unclear, experts worry the short-term plans will weaken the ACA, make health care more costly and cause more medical bankruptcies.
Those most likely to be interested, Stein said, will be the 15 percent of ACA enrollees, about 10,000 Mainers, who do not qualify for subsidies and have borne the brunt of premium increases.
States do have the power to further regulate the short-term plans – New York has banned them outright – but Maine has no plans to do so. The state does have laws on the books predating the ACA that offer some consumer protections, but the protections are not as comprehensive as the ACA.
“The Bureau (of Insurance) has no plans at this time to create any new applicable rules,” said Judith Watters, consumer outreach specialist at the bureau.
About 75,000 Mainers have ACA insurance through the individual marketplace, which is designed primarily for the self-employed or workers who can’t get insurance through their employer.
One of the key weaknesses in the short-term plans, experts say, is the plans don’t have to cover pre-existing conditions, such as high blood pressure.
Short-term plans may become more prevalent after the Trump administration relaxed rules making the policies available to enrollees for up to three years, compared to the Obama-era limit of three months. Maine permits short-term plans for up to 12 months, and a replacement plan for an additional year.
The ACA prohibited short-term plans that lasted more than three months. Hawaii just approved a state law limiting the short-term plans to three months, and a few other states are heavily regulating them, including Massachusetts, Vermont and Rhode Island.
But states that permit the short-term plans to be sold closer to the Trump administration’s vision for them could see the plans cut into ACA enrollment, drive up ACA premiums and leave more people susceptible to medical bankruptcy, experts say.
RISK FOR PRE-EXISTING CONDITIONS
About 20 million Americans have ACA insurance, either through the individual marketplace or Medicaid expansion.
The short-term plans will start to become available to consumers in October, for up to 36 months according to the national rule, instead of the three-month maximum under the ACA. President Trump, who is in favor of repealing the ACA, has touted the short-term plans as an affordable alternative to the ACA marketplace.
But one of the key weaknesses in the short-term plans, experts say, is the plans don’t have to cover pre-existing conditions. About 230,000 Mainers under age 65 have a pre-existing condition, according to the Kaiser Family Foundation.
A pre-existing condition can be any condition that the enrollee knew about prior to signing up for insurance. If the health insurance company discovers the patient had a pre-existing condition before enrolling, the insurer can legally deny claims. A pre-existing condition could be something as serious as cancer or as mild as high blood pressure or a nut allergy.
Before the Affordable Care Act, denials based on pre-existing conditions were one of the more common reasons people would file for medical bankruptcy.
PREMIUMS AND SUBSIDIES
Stein said many of the short-term plans have daily limits on how much they will pay out – so someone who is in an accident and ends up in the hospital for a week or develops a debilitating and costly disease will leave himself vulnerable to taking on massive debts.
In Maine, premiums for higher-income people, those earning more than 400 percent of the federal poverty level, or $83,000 for a family of three, have soared by 70 percent or more since 2014. Depending on age, where you live in Maine and which plan is chosen, ACA premiums for middle-age Mainers who don’t qualify for subsidies have increased from about $300 to $350 per month to $500 to $800 per month since 2014.
The subsidies have shielded those who stay at 400 percent of the poverty level or lower, meaning their premiums are around $100 to $300 per month, depending on which plan is chosen and other factors. Lower-income people who earn about $27,000 or less can qualify for zero-premium plans that have high deductibles.
Premiums for short-term plans can be as low as $30 to $50 per month, according to the Kaiser Family Foundation, a Washington think tank, but some of the plans that offer more extensive coverage can cost $300 or more.
TURNING ACA INTO ‘HIGH-RISK POOL’
Gary Claxton, vice president of the Kaiser Family Foundation, said in a phone interview that the short-term plans do pose a threat to the ACA marketplace. Healthy people who don’t qualify for subsidies may roll the dice and purchase a short-term plan, but as soon as they become sick they will migrate to ACA plans that have more generous coverage.
“These plans have traditionally been lightly regulated because they were not designed for the long term,” Claxton said. “They could provide a bridge to another job. They weren’t meant to be for anyone to be on them for any period of time.”
Claxton said if healthy people purchase short-term plans and remove themselves from the ACA marketplace, that leaves sicker, older people in the ACA. Because insurers set rates based on how likely people will get sick and make claims, removing healthy people from the marketplace will drive up premiums.
“It could turn the ACA into a high-risk pool,” Claxton said.
Unlike some states, Maine does have protections for consumers who buy short-term plans, under laws that predate the ACA. Short-term plans in Maine must cover mental health care, medical equipment for diabetes, mammograms, clinical trials, AIDS care, breast cancer care and preventive screenings.
“Short-term policies are subject to all of Maine’s individual health insurance mandated benefits,” Watters said.
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