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Trump Expands Short-Term Health Care Options. But What's Not Covered?

President Trump's administration in early August published new rules allowing consumers to take out short-term, limited-duration health insurance policies that don't meet the requirements of the Affordable Care Act, or otherwise known as Obamacare.

Officials say these policies will offer more options for consumers, especially those looking for less expensive care. But critics argue that the short-term policies, while cheaper, don't offer enough care to even qualify as real health insurance.

The big issues? The short-term policies pushed by the Trump administration don't have to cover maternity care, people with pre-existing health conditions and the cost of prescription drugs.

The administration's new rules, which will allow people to take out short-term policies and avoid any financial penalties under the Affordable Care Act, will go into effect on Oct. 1. Trump's health department is estimating that 600,000 consumers will take advantage of the change to enroll in short-term health insurance plans next year. The Department of Health estimates that the number of people shopping for insurance and choosing these plans will eventually surge to 1.6 million.

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This begs the question: Are these plans a legitimate option for consumers who want health insurance but don't want to spend a lot for it?

The answer is complicated. In general, though, short-term policies are only designed to serve as emergency insurance, a stopgap until consumers can get more traditional coverage. Short-term policies were never designed to be consumers’ main health care option.

Limits of short-term policies

Even those insurers who provide it are clear that short-term health insurance is meant to be temporary. Medical Mutual of Ohio, for instance, says that the short-term coverage it offers is designed to bridge gaps in consumers' health care coverage, such as when people are starting a new job and must wait for their new coverage to begin.

The main lure for these plans is that they are inexpensive and the range in savings among policies could be substantial. Insurer UnitedHealthcare says that it offers short-term health plans starting at $23.70 a month. The main negative? They don't offer as much coverage.

Such policies don't cover pre-existing medical conditions. They also rarely cover maternity care, preventative care or treatment for mental illnesses. Plans usually don’t cover routine doctor visits — which is a form of preventative care  and usually won’t cover the costs of prescription drugs.

Because of these limitations, these policies do not meet the requirement of the Affordable Care Act that consumers have adequate health insurance.

Under Trump's new rules, though, consumers who take out these policies won't face any penalties for violating the rules of the Affordable Care Act. This will pave the way, the administration says, for consumers to get health care at lower prices.

Changes for health insurance policies

In late 2016, the Obama administration finalized a rule stating that short-term insurance policies can only last for a maximum of three months. The Trump administration's new rules expand that limit greatly, to 364 days.

The new rules state, too, that insurance companies can extend policies if consumers request it. The maximum length of any short-term policy even with extensions would be 36 months, according to the new rules. This also gives consumers the option of having more time to shop around for a different price or policy, especially if their first short-term policy ends up not meeting their needs.

The U.S. Department of Health and Human Services said that during the final three months of 2016 the average monthly premium for a short-term health insurance plan stood at $124. The average cost of an insurance plan through the Affordable Care Act's insurance marketplace was $393, before subsidies are included.

Under the Affordable Care Act’s initial rules, consumers had to pay a fine if they did not get adequate health insurance coverage. Consumers who relied on short-term policies had to pay this fine, too, because these policies weren’t considered adequate under the Affordable Care Act.

That is changing in 2019. In late December of 2017, when signing his Tax Cuts and Jobs Act, Trump approved a measure that eliminates this penalty. That takes effect in 2019, which means that consumers won’t face any financial hit from not enrolling in what the Affordable Care Act designates as adequate health insurance.

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This will make short-term coverage, then, even more attractive to consumers who now won’t have to worry about facing a penalty for taking out one of these plans.

Alex Azar, secretary of the Department and Health and Human Services, released a statement touting the extension of short-term health insurance as providing another option to people who want health coverage but who don't want to, or can't afford to, spend as much on it.

"The plans provide a much more affordable option for millions of the forgotten men and women left out by the current system," Azar says.

Azar adds that short-term plans might make sense for people who are independent contractors and don't receive insurance from employers. The plans might work, too, he says, for people who are between jobs or for recent college graduates who aren't yet employed.

Health care quality vs. cost

Not everyone agrees, and physician groups haven't been supportive, saying that short-term policies offer low-quality care and should not be promoted as legitimate alternatives to longer-term insurance coverage.

In April, Dr. John Meigs, Jr., board chairman of the American Academy of Family Physicians, wrote a letter to Alex Azar, secretary of the U.S. Department of Health & Human Services, that the academy is opposed to the Trump administration's new rules.

"The AAFP strongly opposes the proposed rule since it allows plans to sell low-value insurance policies that could subject patients to catastrophic medical bills and medical bankruptcy," Meigs wrote.

A group of health care associations including the American Heart Association, American Lung Association, National Multiple Sclerosis Society, National Health Council and Leukemia & Lymphoma Society all co-signed a letter in late April criticizing the rules change, too.

In this letter, the groups wrote, "Given the history of discrimination and inadequate coverage within short-term limited-duration plans, we are deeply concerned that the proposed rule could seriously undermine the key principles of access, adequacy and affordability that are the underpinnings of current law, and put those we represent at tremendous risk."

The bottom line? You’ll have to make your own decisions regarding short-term health insurance.

Your best bet, though, is to use this insurance as it was originally designed, as a temporary fix instead of as permanent coverage. Short-term coverage might make sense as s stopgap as you wait for a new employer to provide you more complete insurance. But its limitations make it a poor substitute for insurance plans designed to cover all your medical needs.

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