The Obama administration is calling for a salient limit on short-term health insurance plans as an increasing number of consumers are purchasing plans that do not meet Affordable Care Act requirements, Kaiser Health News reported.
Short-term health insurance plans assist people who need temporary coverage while transitioning to a regular policy. These plans are generally cheaper than regular policies. However, some do not cover preexisting medical conditions, maternity care or prescription drugs, as required by the ACA. Insurers can also limit the maximum amount they will pay and refute short-term plans to consumers they predict will accumulate high medical costs, according to Kaiser Health News. The ACA bans both of those practices for regular health coverage.
Under the proposal, short-term policies could not exceed three months nor be renewable. Currently, short-term polices can last a year. HHS would also necessitate insurers tell consumers short-term plans do not meet ACA requirements and as a result, consumers could receive a tax penalty.
"People buy these policies probably not fully understanding that they're not getting comprehensive coverage, and then they have to pay the penalty, and if anything serious goes wrong, they have very limited coverage," Timothy Jost, a law professor at Washington and Lee University who has studied the ACA, told Kaiser Health News.
Fears of consumers not having "meaningful health coverage" and a lack of healthy individuals with ACA-compliant insurance plans fueled the government's decision. Fewer healthy people in the exchange could increase premiums for all plans sold on healthcare.gov and other state marketplaces, Kaiser Health News reported.
The Obama administration also plans to change how it analyzes financial risk in insurance populations, like including consumers who acquire plans for some part of the year, as well as prescription drug use. These costs will be analyzed when the government reshuffles money from insurers with sicker consumers to those with healthier ones.
Additionally, the HHS plans to increase the number of marketplace customers who sign up for Medicare when they turn 65, as those not signed up for the program may pay higher premiums and lose ACA subsidies. The government says it will increase Medicare users by contacting eligible consumers currently enrolled in commercial insurance plans and advising them to switch to Medicare, according to Kaiser Health News.
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