Drawbacks To The New Short-Term Healthcare Proposal

stethoscope, graph, doctor

In our previous post, we introduced the details of the Trump administration’s new short-term healthcare proposal. In this entry, we’ll have a look at some of the issues with the initiative.

Drawbacks of the new Proposal

Preexisting Health Conditions

One of the primary criticisms of the new policy is its policy towards preexisting health conditions. In short-term healthcare, clients with prior health conditions, typically aren’t eligible for the same coverage as those without such a history.

Short-term coverage does not need to comply with consumer protections required of comprehensive health insurance. Unlike individual policies that comply with the regulations of the ACA, insurers selling short-term coverage can deny enrollment to people with preexisting conditions and exclude from coverage services needed to treat those conditions. The insurer can even deny a new or renewed contract if the enrollee becomes sick or injured during the coverage term.”

To get a perspective on just how many people we are talking about, we’ll look at the Kaiser Family Foundation’s (KFF) study. The researchers asked, “How many American adults could face difficulty obtaining private individual market insurance if the ACA were repealed or amended.”  Gathering data on non-elderly people (elderly people would seem to have significantly higher percentages) in 2015, they estimated the percentages of “declinable pre-existing conditions under pre-ACA practices,” to affect 27% of non-elderly Americans, a total of 52,240,000 people.

Here’s a breakdown of the local statistics:

  • Delaware 29%
  • Maryland 26%
  • Pennsylvania 27%
  • New Jersey 23%

This would seem to indicate that a large portion of Americans will not qualify for the new short-term healthcare. And “even if they are offered coverage, people with preexisting health conditions may never have claims paid under short-term coverage. Insurers may comb through members’ medical histories to determine if a service was for a preexisting condition in order to deny a claim.”

Higher Maximums

Another issue is the costs. According to a recent study by The Commonwealth Fund, “Cost-sharing designs in short-term coverage leave members facing major, unpredictable financial risk. The out-of-pocket maximum for each best-selling plan is higher than that allowed in individual or employer plans under the ACA, when adjusting for the shorter plan duration. When considering the deductible, the best-selling plans have out-of-pocket maximums ranging from $7,000 to $20,000 for just three months of coverage. In comparison, the ACA limits out-of-pocket maximums to $7,150 for the entire year.”

Effects on long-term Healthcare

The Commonwealth researchers claim that the problem may run deeper. “Allowing plans that are only viable for healthy people to be offered for more than three months will further syphon healthy individuals away from traditional health insurance, resulting in a sicker risk pool in the individual market, driving up premiums, and putting the individual insurance market at risk.”


The Future

According to the Centers for Medicare and Medicaid Services (CMS), “Based on enrollment trends prior to the October 2016 final rule, the Departments project that approximately 100,000 to 200,000 additional individuals would shift from an ACA-compliant individual market plan to short-term, limited-duration insurance in 2019.”

Should we be excited about this? Time will tell.

What’s your opinion ?

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