Trump's short-term insurance proposal could cost more than expected

Trump's short-term insurance proposal could cost more than expected
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The Trump administration’s proposal to allow insurers to sell more limited, short-term plans would cost the federal government more money and affect more people than the administration previously estimated, according to a new federal report.

A report dated April 6 but released this week by Medicare's chief actuary found that the short-term plans would siphon off the healthiest people from the ObamaCare exchanges, leaving a risk pool that is older and sicker than is currently the case.

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According to the report, an estimated 1.4 million people are expected to sign up for short-term plans in 2019, the first year the new rule will take effect. That number is projected to rise to 1.9 million by 2022.

The administration previously estimated that only about 200,000 people, at most, would purchase short-term plans.

Those remaining in the ObamaCare exchanges “would be relatively less healthy,” the report said, causing average premiums to rise.

The statement echoes arguments made by Democrats and the insurance industry, who have warned about the consequences of expanding access to the plans.

As premiums increase, federal spending on tax credits to help people afford those premiums would also rise.

According to the actuary, federal spending would increase by $1.2 billion in 2019 and $38.7 billion over the next 10 years. The Trump administration estimated an increase of $96 million to $168 million a year.

The report found that premiums for the short-term plans will cost half as much as the average ObamaCare exchange plan.

Short-term plans also can skirt ObamaCare rules about coverage requirements, such as having to cover pre-existing conditions. Those plans are also not required to cover the law's essential health benefits like maternity care, mental health or prescription drugs.

Under current law, short-term plans can only last for three months. The Trump administration’s proposal, which is expected to be finalized next month, would allow the plans to last for up to a year.

But those plans could last even longer than a year, according to the report.

“There is nothing in the proposed rule that would prevent companies from underwriting and issuing new policies to individuals at the end of the one-year coverage term,” it said.

Top administration health officials have defended the proposal as necessary to help people who have been harmed by unaffordable ObamaCare coverage.

Health and Human Services Secretary Alex Azar last week said the short-term plans “may not be the right option for everybody” but noted that for some individuals, “it may be better than nothing.”

Centers for Medicare and Medicaid Services Administrator Seema Verma on Tuesday said the short-term plans could “potentially could be a lifeline” for people priced out of ObamaCare.

Insurers in Maryland and Virginia have already requested double-digit premium hikes for their ObamaCare plans in 2019, and some plans have said Trump administration policies are making the risk pool sicker.