Trump eases rules on insurance sold outside of ObamaCare

The Trump administration on Tuesday made a controversial move to expand access to health insurance plans that do not meet the requirements under ObamaCare.

The proposed rules would allow people to buy short-term health insurance for up to 12 months, lifting restrictions from the Obama administration that limited the coverage to a maximum of three months. 

It’s the latest step taken by the Trump administration to open up cheaper, less-comprehensive insurance options as an alternative to people signing up for ObamaCare. Republicans say these options are needed to help people facing high costs under the health law.

The short-term plans announced Tuesday differ from ObamaCare in one key respect: people with pre-existing conditions can be charged more. In addition, the plans to do not have to comply with ObamaCare mandates for covering certain services, such as mental health treatment or prescription drugs. 

“The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices,” Health and Human Services Secretary Alex Azar said in a statement. “The Trump Administration is taking action so individuals and families have access to quality, affordable healthcare that works for them.”

The change to the short-term plans was set in motion by an executive order President Trump signed in October instructing agencies to ease the burdens placed upon people by ObamaCare.

Democrats say the latest action is part of a campaign to “sabotage” ObamaCare. They fear healthy people will leave ObamaCare markets to buy the short-term plans, damaging the health-care law’s stability.

“Bottom line, this is a green light to discriminate against Americans with pre-existing conditions that’s going to make quality health insurance more expensive and less accessible,” Sen. Ron Wyden (D-Ore.) said. 

Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, pushed back on the Democratic criticism. 

She pointed to her agency’s estimates that only 100,000 to 200,000 people would move from the law’s marketplaces into the short-term plans.

“The shift will have virtually no impact on individual market premiums,” she said.

Some experts cast doubt on the administration’s estimates of just 100,000 to 200,000 people leaving the marketplaces. “That seems very low to me,” said Larry Levitt, a health policy expert at the Kaiser Family Foundation. 

Levitt said there would be higher premiums in the marketplaces as healthy people opt for the cheaper, short-term plans, though the increase would probably be below 10 percent. 

On the flip side, though, among people who earn too much to obtain financial assistance under ObamaCare, “there are potentially millions of people who could get cheaper insurance” in the short-term plans, Levitt said. 

Joe Antos, a health-care expert at the right-leaning American Enterprise Institute, said he thought the number of people enrolling in the ObamaCare marketplaces would remain steady. The main change from the new rule, he predicted, would be to create a new option for people who do not qualify for financial assistance under ObamaCare.

“I don’t see this as having any huge, immediate impact on the exchanges,” Antos said.

Administration officials also said the change is largely just returning to the rules that existed before the Obama administration clamped down in 2016. However, the Trump administration is also considering whether to allow the renewal of the short-term plans even beyond 12 months.

Another major change since 2016 is the repeal of ObamaCare’s mandate to have insurance, which Republicans did away with in December. Since people will no longer be fined for not having ObamaCare-compliant coverage, they may opt to enroll in the short-term plans.

Levitt said the new rule has a “compounding effect” with the repeal of the mandate, but cautioned that the impact remains “unpredictable.”

Here’s a review of the Trump administration’s biggest actions on ObamaCare so far:

Cutting outreach funding

August 2017: The administration announced a 90 percent cut to funding for advertising and outreach that encourages people to enroll in ObamaCare. Officials said the outreach was often ineffective, but Democrats warned it would hurt enrollment. 

Cancelling key insurer payments

October 2017: President Trump cancels key ObamaCare payments known as cost-sharing reductions, which reimburse insurers for giving discounts to low-income enrollees. The White House argued the payments were unconstitutional because Congress had not approved the funding. 

Mandate repeal

December 2017: After President Trump pushes for its inclusion, Congress repeals ObamaCare’s individual mandate as part of the tax-reform bill. The mandate had long been one of the most unpopular elements of the Affordable Care Act.

Association health plans

January 2018: The administration issues rules expanding “association health plans,” which allow small businesses or self-employed individuals to band together to buy coverage. Republicans said the move would provide cheaper options outside ObamaCare.

Short-term plans  

February 2018: The administration proposes expanding the use of short-term health-care plans.