The war on Obamacare is one of the many fights that the Trump Administration has in their sights. There are many aspects to the healthcare industry at the forefront of the government’s agendas, and individual health insurance reform is a priority. Many approve of this change in temporary or short-term health insurance plans.
Proposed changes and repeals continue to make the headlines – often with minimal impact in the long term. However, a new proposition on short-term health insurance plans is set to shake the system up like never before.
Officials reiterate the idea that Obamacare is too costly, pricing out the vulnerable and ruining individual health insurance options for the public. Republicans and providers talk about the improved accessibility and lower costs as clear benefits. There are others that see through the facade of this change to some underlying problems.
The Whitehouse vs. The Critics
Naturally, the Whitehouse and government officials are eager to portray this new venture as the breakthrough needed in this war. One headline at the time of the launch read Justin Haskins of the Washington Examiner ran an anti-Obamacare piece that celebrates this new approach.
The column talks about a “major victory for young people and working Families.”There is no question that these temporary health insurance plans are a new, more affordable option on the surface.
Recent estimates suggest that a standard silver plan under the current Affordable Care Act now costs, on average, $481 a month for a typical 40-year-old non-smoker. Current plans suggest that the short-term plan may cost far less – perhaps just $160 a month.
It is easy to see the immediate appeal here for any family struggling to balance their finances. But, it is vital that critics, insurers, officials and – most importantly – families take a closer look at this new approach.
There are indeed plenty of critics out there that see the flaws straightaway.
Many news outlets – surely branded “fake news” outlets by the Administration – were quick to point out the issues with this new approach. It didn’t take much for journalists and financial advisers to dig a little deeper beneath the press release and find some traps.
The New York Department of Financial Service referred to these new short-term plans as little more than “substandard products.” Their deputy superintendent went on to say that because “junk insurance is better than nothing,” consumers will accept the consequences.
Short-Term Doesn’t Mean Short Term
So what is the main difference between these plans that make them short-term options to rival Obamacare?
With Obamacare, there was the option of a short-term coverage plan. This was a helpful piece of insurance designed to cover gaps in employment or emergency situation. The upper limit here was 90 days. Many saw this period as reasonable for the circumstances. A person has 90 days to find new employment with a better plan or to negotiate something better.
The new ACA short-term plan from Trump extends this significantly. There is a 364 day limit on the initial plan, which therefore covers users for the whole year. There is also the chance to renew the plan with extensions for up to three years. Three years is not a short-term plan by any means.
Users can enjoy the benefits of this short-term deal for far longer than before. Therefore, citizens could see a significant reduction in costs for an extended period of coverage.
There will be many people looking for affordable health care that see this as a win-win situation.
The Trump administration has increased the length of the coverage and lowered the costs. Therefore, there is the reasonable assumption that citizens will get a much better deal. Unfortunately, the reality could be far different.
Affordable healthcare in this situation doesn’t mean reducing the costs of current packages. Instead, it means providing a streamlined, cost-effective alternative that may prove to be a problematic compromise.
The 10 Essential Health Benefits
The biggest problem with this new temporary health insurance plan is the relation to the 10 essential health benefits. There are 10 essential health benefits that US citizens can enjoy in their healthcare plan. Current ACA rules mean that all customers have an entitlement to these rights regardless of their plan and situation.
Therefore, there is greater access to health care under the ACA. But, there is no requirement for short-term plans to offer the same breadth of coverage. It is possible for users to pay a smaller amount and see vital services cut.
Those 10 essential benefits are as follows:
- Ambulatory patient/ outpatient services. This area of general care is one where users should still receive a reasonable level of coverage. It refers to too many procedures and needs for insurers to cut it altogether. It still helps if buyers read the fine print on their plans.
- Emergency services. This is another area that should have a reasonable amount of coverage. There is the risk of the small print once again. For example, some insurers might refuse coverage if a claimant needs emergency help for a situation that is their fault. This could mean emergency aid following intoxication or certain accidents.
- Hospitalization. This is a big concern with these new health care plans. Hospitalization can affect anyone at any time for unknown reasons. This risk is even more likely if the plan extends to three years. But, some short-term plans will reduce coverage for hospital stays, or perhaps offer none at all. The coverage inconsistency is another issue that citizens need to review.
- Maternity and newborn care. Insurance claimants may assume that this area of healthcare insurance is set in stone. All mothers and newborns deserve help during this time. This is another area up in the air right now.
- Mental health and substance use disorder services. This is an area with a giant red flag over it right now. It took long enough for people with mental health disorders to receive coverage. The same is true for those with substance abuse issues. These short-term plans could reverse this and limit access to the most vulnerable.
- Prescription drugs. President Trump recently suggested a reduction in prices for prescription drugs to make them more accessible to more citizens. There are still questions over the details of these short-term plans. Again, some providers may offer more options than others.
- Rehabilitative and habilitative services. Unfortunately, this is another area that might be a low priority for healthcare providers. If mental health and rehab services suffer, so could these additional aids.
- Laboratory services. Again this shouldn’t be too big an issue, and there is little mention of cuts here.
- Preventive and wellness services and chronic disease management. This is another area of uncertainty with these short-term healthcare plans. There is a threat that many health insurance providers will remove access to care for pre-existing conditions. This is, therefore, a problem for those dealing with chronic pain and disease management.
- Pediatric services, including oral and vision care. Again, this service should be safe given the nature of the provision. There could still be hidden clauses and issues in the small print.
There are therefore many fears that this is a step backward for the ACA.
This Act assured citizens that they could receive these essential health benefits without caps. This meant a universal system that was fair and accommodating, regardless of location, age, or other factors. This was a significant improvement for those looking for help with mental health and substance abuse disorders.
Now, these services may not be an option for those on short-term plans. There are therefore fears that this new approach could send the system back to where it was before the ACA.
Back then, 10% of users had no coverage for prescription drugs. Also, nearly 20% could not access mental health care, and a third had no coverage for substance use treatment.
This is why it is important to read the small print on all of these short-term plans. There are sure to be plenty of hidden problems and omissions that might cause problems down the line.
For example, a new short-term policy may hide exemptions for specific options, such as any injuries sustained through intoxication or during organized sports. Buyers may think they are getting a good deal when it is all just smoke and mirrors for a barebone contract.
Other providers may refuse coverage for minor health conditions, allergies, or those not treated previously. It is a complicated minefield, and desperate buyers may not understand the implications.
The Deeper Implications Of A Bad Decision
A lack of coverage means an inability to pay when there was the assumption that health insurance would cover the situation. Increased healthcare costs over the year make the savings on the short-term plan meaningless in the long run.
An additional problem here is that many people in need of short-term plans don’t have the time or inclination to browse and read the fine print. These people are those recently redundant or in the middle of life-altering situations. Their current plans have vanished, and they are desperate for an alternative.
These new short-term plans sound like the perfect option on the surface. The smaller monthly payment for a longer transition period. This immediate gratification could be enough to sign on the dotted line. Then the ramifications set in as they realize what this new plan means.
One of the benefits of the 90-day short-term plan was that it was a temporary life raft to help users in these situations. It was a short-term situation with little thought to what might happen two years down the line. By then, users would have switched to their new, permanent plan. With this model, that 2-year gap seems a lot smaller.
Nobody knows how conditions will deteriorate at this time – although a lack of coverage for pre-existing conditions could make this null and void. Then there are all the potential illnesses and accidents or the unexpected pregnancy and birth of a new child. There may be new mental health issues due to long-term financial stresses.
This bare-bones coverage doesn’t seem to have an answer for that. Users could extend their cheaper plan for a third year with no additional benefits and minimal access to care.
Then there is the potential impact on others within the health insurance system.
Experts also take about a potential siphoning effect on those already in the health insurance system. Many healthcare advocates fear that these inexpensive temporary health insurance plans will remove critical patients.
This means those healthier patients that aren’t in the market for comprehensive coverage or those can’t afford the robust benefit policies. This shift could lead to insurers covering patients with complex needs, but without healthier patients in the mix. A potential risk here is higher premiums for small business owners and their employees.
Source: CBS News Money Watch
Shutting Americans Out Of Healthcare Provisions
Part of the criticism of Obamacare from the Trump administration is that insurance premiums more than doubled for ACA plans between 2013 and 2017. The government claims that this shutout many middle-class Americans who don’t get subsidies.
But, we can also argue that this new approach will shut a different group out of the market in a new way. It is just a different system and a different way to hit consumers where it hurts.
Whatever insurers and critics may think, the Trump administration is certain of success. William Brady from the Department of Health and Human Services has some impressive figures. He states that as many as two million people will enroll. He also states that these plans would be 50% to 80% lower than figures seen with “Obamacare policies.”
The short-term benefits of these short-term plans are clear. Many claimants will get drawn into these lower costs. But, the deeper issues may rear their head before those final extensions are over on this temporary health insurance. There are issues here that need addressing before it is too late.