Russian asset Donald Trump has finally deployed one more Affordable Care Act sabotage, one that everyone in the industry, from insurance companies to providers, has panned. It's an expansion of short-term, limited-duration plans allowed under Obamacare that functioned as a stop-gap for people waiting to secure permanent insurance.
These plans aren't subject to the comprehensive benefits and protections that regular insurance plans must cover under the law. They had been allowed for a maximum of three months under the law, but the Trump administration is stretching that out to 364 days, a day short of a year to skirt under the law, with the option for two renewals. Meaning people could be "covered" by these skimpy plans for up to three years.
The plans are going to be cheap, which will be their big attraction. "We do think those plans will be very attractive to those who have been most poorly served by the Affordable Care Act," said Randy Pate, a deputy administrator at the Centers for Medicare and Medicaid Services in a call with reporters Monday evening. That's the people who are in the Medicaid gap in states that didn't take the expansion, people who don't qualify for subsidies under Obamacare, and people who want to save money. And, as Pate pointed out, younger and healthier people. "This could be an option for them," he said. Which is kind of the point of the rules—it's again trying to draw health people out of the Obamacare markets, trying to make that "death spiral" for the plans kick in. As healthier people leave the pools, the sicker, more expensive people stay in and eventually costs become unsustainable for insurers, and they leave the markets. That's the plan.
The people who take these skimpy plans are playing with fire. If they become catastrophically ill, if they get pregnant, if they have a bad accident, they're screwed. They'll have to pay out of pocket for mental health care, for maternity care or for prescription drugs that these kinds of plans often don't cover completely or just don't cover at all. In an interview with HuffPost, Georgetown University research professor Sabrina Corlette sees potential disaster for any takers of these plans. "Many consumers will buy these plans thinking they are getting a great deal. […] But if they need health care services and the bills start to pile up, they'll quickly discover that these plans cover very little."
The administration says it foresees as many as 1.2 million people will end up with these plans. There's a market for these plans, definitely, but it's not clear how many insurers are going to be willing to undercut the plans they've created for the Obamacare markets—and the restructuring of their whole business—to implement them.