President Donald Trump’s administration has finalized an exemption allowing for a much cheaper health insurance plan. Advocates and businesses say the affordable choice will lead to more insured but others worry it’s woefully inadequate coverage.
The administration has issued its final rule change allowing for short-term, limited duration insurance plans, or STLDI’s. These are plans that offer much less in terms of coverage but at prices sometimes up to 80 percent cheaper than a plan that abided by the Affordable Care Act’s rules. A key update to Trump’s rule change is the ability to extend the plans to 12 months.
Naomi Lopez-Bauman with the Goldwater Institute says the plans will allow people that couldn’t afford an ACA-compliant policy to still protect themselves from financial ruin should they get seriously hurt.
“Of course, they’re not the right fit for everyone but they do give some people another option to provide financial security for their families,” she said, adding that many enrolled in ACA exchanges have dropped coverage entirely due to the annually rising premiums. An estimated 28 million Americans are uninsured today.
Many counties in Illinois only have one insurance provider option in their ACA exchanges due to the high cost of underwriting the plans.
Mark Grant with the National Federation of Independent Businesses’ Illinois chapter says the new plans will allow more small business owners to purchase coverage for themselves and their employees.
“Small business owners are really excited about some low-cost, very reasonable and, actually, very good coverage for these smaller companies who have been priced out of the marketplace,” he said.
Others have said that small businesses have done fairly well under the Obamacare exchange offerings for them, seeing savings of up to 35 percent over individual plans.
In a statement, Danny Chun, spokesman with the Illinois Health and Hospital Association, warns that STLDI plans are “cut-rate and don’t provide true comprehensive coverage.”
STLDI coverage would not have to cover pre-existing conditions or prescription drugs, two signature requirements under Obamacare.
Should Illinois allow them to be offered, some predict it would drive up coverage costs in the state exchanges due to a smaller pool of participants.
The Urban Institute predicts premiums for members of Illinois’ Obamacare exchange would rise by 19.4 percent in 2019 alone.
“These plans will draw healthy consumers and people now enrolled in the ACA exchange plans, leaving the larger individual insurance market worse off – with a pool of less healthy (sicker) consumers – driving up premium costs for them,” Chun said.
A bill on Gov. Bruce Rauner’s desk would severely limit the availability of these plans by restricting the extension of their duration, something critical to their widespread appeal.
“Any steps to reduce the duration of these plans really does slam the door shut on consumer access and affordability,” Lopez-Bauman said.
NFIB Illinois opposed the state legislation during its passage.
“All it would do is take away a small business owner’s options,” Grant said.
Massachusetts, New Jersey, New York, Oregon, Vermont, and Washington already have laws that would prevent an expansion of this lower-priced insurance.