Expanding maximum duration of short-term plans expands freedom, choice for consumers
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Before last week, Americans without employer-sponsored coverage seeking quality, affordable health insurance were caught between paying continually escalating ObamaCare premiums for one-size-fits-all plans that ignored their unique needs, or foregoing coverage altogether.

Now, thanks to the Trump administration’s final rule on short-term, limited-duration health insurance plans, millions of Americans no longer have to make that difficult choice. In STLD plans, consumer choice and competition have combined to create an innovative solution to providing people with coverage that’s actually useful to them, at a price they can afford.

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STLD plans are an affordable alternative to ObamaCare plans, which are costly and volatile. ObamaCare requires users to purchase coverage stuffed with “essential health benefits” that were mandated to be a part of these plans regardless of the consumer’s needs. This top-down approach to health care caused premiums to skyrocket from 2017 to 2018, in some cases by as much as 17 percent for family coverage. In contrast, STLD plans allow families to customize their health care and purchase the benefit coverage that works for them. As a result, premiums for STLD plans are 50 to 80 percent lower than ObamaCare’s. 

Because of the high costs of its plans, ObamaCare has been continually losing insurers from its exchanges. Aetna pulled out completely this year, and several other companies pulled out of certain states, such as Molina Healthcare leaving the exchanges in Utah and Wisconsin. This volatility in the exchange market leaves consumers without stability or choice – ingredients essential to making informed health care decisions. But STLD plans allow consumers to buy policies from an array of carriers competing for their businesses, giving them greater flexibility of coverage.

Additionally, the insurance carriers left on ObamaCare’s decimated exchanges offer narrow networks of coverage. Many quality doctors and top hospitals don’t accept current ObamaCare plans, but they do take STLD plans – giving patients greater access to more of the best health care providers in the country.

Opponents of the rule argue these plans will leave people in the lurch if they develop a high-cost medical condition, and that’s why they’re doing people a favor by trapping them on exchanges. But as exchanges become dominated by Medicaid-type policies, those worried about developing a serious condition would actually want to be in an off-exchange, STLD plan with access to top providers.

The Trump administration’s final rule expands these benefits of STLD plans to an even greater number of people. By extending the allowed coverage period from three months to 12 – and greenlighting the option for consumers to renew these plans for up to 36 months – an estimated 1.4 million Americans will take advantage of these short-term plans. Along with the short-term plan, a policyholder could buy a supplemental policy to guarantee renewal in the future without a premium increase. Prior to the Affordable Care Act, UnitedHealthCare offered insurance products like this, basically a form of health status insurance. This would protect people by creating a clear benefit to those who don’t wait until they get sick to buy insurance.

Additionally, expanding the maximum duration of STLD plans will provide relief especially to those who lack coverage now. Minority communities impacted by limited options and soaring costs in particular will benefit from the expansion. The Kaiser Family Foundation reports that 22 percent of non-elderly Hispanics went without care in the last year. Now they have a whole market of affordable, customizable options to choose from.

In making its ruling, the administration has reintroduced freedom and greater choice into the health care market. This can only benefit consumers trapped in rigid, expensive ObamaCare plans. Now they have access to a competitive STLD market offering a wider variety of flexible plans, at a price that’s within reach for everyday American families.

David Barnes is a policy manager for Americans for Prosperity.