Two Blows to Affordable Care Act

The tax bill that passed the U.S. Senate on December 4 eliminates the Affordable Care Act’s (ACA) individual mandate, which requires nearly everyone to get insurance. This provision is projected to reduce the number of insured Americans, particularly healthier people, by 13 million by 2027 and boost premiums each year by an average of 10 percent, according to the Congressional Budget Office.

Another hit to the individual insurance market is the pending executive order allowing insurers to sell short-term health plans, or plans lasting up to 364 days, that were not allowed under the ACA. The Obama administration limited the duration of such plans to 90 days, making them less appealing to consumers.

Premiums for short-term plans are lower because insurers don’t have to sell these plans to people with pre-existing conditions. They can exclude coverage for maternity care, behavioral health, prescription drugs, and other ACA-required benefits. They can impose annual and lifetime benefit caps. And they can deny benefits or even rescind policies if enrollees file claims for what insurers deem pre-existing conditions.

These two changes will “suck more people out of qualified health plans, which will become a high-risk pool for the sickest and most expensive people,” Margaret Murray, CEO of the Association for Community Affiliated Plans, told Reuters.

Regardless of the new federal rules, states have broad authority to establish their own policies on short-term plans to protect consumers and maintain the viability of their ACA-regulated market. Some states already impose restrictions on short-term plans. New York and New Jersey effectively prohibit short-term plans by requiring insurers selling short-term products to cover all ACA-mandated essential health benefits and to issue policies to any applicant regardless of pre-existing conditions, according to Sabrina Corlette, an insurance expert at Georgetown University’s Health Policy Institute.

Source: Modern Healthcare, December 4, 2017.