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HHS announces plans to curtail consumers’ use of short-term insurance policies

akronohio.gov

From theKansas Health Institute:

The Obama administration on Wednesday moved to sharply limit short-term health insurance plans, which a growing number of consumers have been buying even though they offer less coverage than what the Affordable Care Act decreed all people should have.

The plans, designed for people between jobs or in need of temporary insurance until they secure a regular policy, are cheaper than regular insurance plans. But they also can lack features that the health law requires for other policies, such as coverage for pre-existing medical conditions, maternity care and prescription drugs. In addition, insurers are allowed to refuse to sell short-term plans to people they think will run up large medical costs, and insurers can cap the maximum amount they will pay. Both practices are banned for regular policies under the health law.

The U.S. Department of Health and Human Services said under its proposal, short-term health policies could be written for no longer than three months, instead of up to a year as is currently allowed. In addition, consumers would not be able to renew the policies. The department said it plans to require insurers to clearly tell consumers that the plans do not qualify as coverage under the health law and that they may still face a tax penalty if that is the only insurance they have.

“People buy these policies probably not fully understanding that they’re not getting comprehensive coverage, and then they have to pay the penalty, and if anything serious goes wrong, they have very limited coverage,” said Timothy Jost, a law professor at Washington and Lee University who has studied the ACA.

The government said these changes were necessary to ensure that consumers have “meaningful health coverage” and that the short-term plans would not siphon away healthy people from other insurance plans that comply with the ACA. An exodus of healthy people could lead to increasing premiums for the remaining people in plans sold on healthcare.gov and on state marketplaces.

“It’s important for the stability of the risk pool that people be encouraged to buy coverage whether they’re healthy or not healthy,” Jost said.

Simultaneously, the government announced refinements to the methods by which it gauges financial risk of insurance populations. It plans to begin factoring in people who held plans for part of the year and include prescription drug use. The government said these changes would help insurers better predict the cost of medical care for enrollees and price its policies appropriately.

The department further announced that it planned to take a more active role in getting marketplace customers to sign up for Medicare when they turn 65.

People who do not sign up on time for Medicare B, which covers outpatient care and doctors visits, could end up paying higher premiums when they eventually enroll. They also will likely lose their subsidies for the marketplace plan after they are eligible for Medicare.

The government will begin this summer contacting people enrolled in commercial plans to advise them on how to transition to Medicare.

Kaiser Health News (KHN)is a nonprofit news organization committed to in-depth coverage of health care policy and politics. The Washington, D.C.-based news service is a partner of KHI News Service.