Affordable short-term healthcare plans can flourish thanks to Trump
Millions of people will continue to have access to affordable short-term health plans, thanks to a new ruling from the U.S. District Court of Appeals for the District of Columbia.
A three-judge panel of the court upheld by a 2-1 margin a Trump administration rule extending the maximum duration of a short-term plan to just under a year. Insurers can also renew the plans for up to three years.
Short-term plans are appealing because they’re so affordable. Unlike those for sale on the exchanges, they’re not required to cover the 10 “essential” benefits mandated by Obamacare that not every person may want or need, such as substance abuse treatment. Short-term plans also do not have to accept all comers. So they can be a cheap option for people without preexisting conditions who are facing a gap in health coverage.
To take just one example, the premium for a short-term plan for a 30-year-old nonsmoking man in Fulton County, Georgia, can run about 46% less than the premium for an exchange plan with comparable benefits.
The Obama administration was aware of price discrepancies such as this one, and so limited the duration of short-term plans to three months in order to encourage consumers to purchase exchange coverage. In 2018, the Trump administration set the maximum duration at 364 days. The rule change has since been upheld by two different courts.
The decision couldn’t come at a better time. The economic crisis caused by the pandemic has left millions of people without a job and the employer-sponsored health insurance that often comes along with it. Covering the cost of employer-sponsored coverage through COBRA can be incredibly expensive. Exchange coverage is also pricey: The average monthly premium for a benchmark plan nationwide is $462.
Workers aged 16-34 report higher rates of unemployment than any other age group. Inexpensive short-term plans are perfect for this demographic group, which is generally healthier than older people. Younger people typically need protection against a freak accident or medical emergency, not comprehensive coverage. Thanks to the court’s ruling, they can still get it.