A federal proposal to expand short-term health plans could mean older Americans with insurance through the Affordable Care Act will pay an average of $2,000 more in 2019 premiums, according to the AARP.
The rule proposal, issued jointly by several federal agencies last month due to a 2017 directive by President Trump, would allow short-term health-care policies to span 364 days instead of the current three months.
While federal officials say the intention is to provide more affordable coverage options, critics say the move — coupled with the recent elimination of a penalty for non-coverage starting in 2019 — could drive even more young and healthy consumers away from the ACA marketplace. Short-term plans come with limited coverage and are largely unavailable to people with health problems.
"It creates a situation where older Americans and people with pre-existing conditions are left in the ACA marketplace, and that would make their premiums go up," said Megan O'Reilly, director of AARP's federal health and family team.
Basically, if healthy people flock to these short-term policies, consumers covered by ACA-compliant plans would likely watch their premiums rise because the remaining pool of people would be more expensive for insurers to cover.
The Urban Institute estimates that the proposed rule, in combination with the elimination of a fine for not having health coverage, would increase premiums by an average of 16.4 percent in 2019, although it could be 20 percent or 21 percent in some states.
AARP, the nation's largest advocate for older Americans, used 2018 marketplace premiums to calculate what that would mean for 60-year-olds who buy a silver plan — the second-lowest cost option — through an ACA exchange. Under that scenario, the average yearly premium increase would be $2,000, although the range would be about $1,000 to $4,000, depending on the state.
Short-term plans have been an option for people who find themselves between jobs or other sources of coverage. These plans are exempt from certain consumer protections under the ACA, which means, for example, they don't have to cover pre-existing conditions, mental health needs or prescription drug coverage.
They also can charge older consumers more — or deny coverage based on age — or impose annual or lifetime caps on coverage.
The AARP says 40 percent of people ages 50 to 64 have a pre-existing condition. (Once they turn 65, they are typically eligible for Medicare.) This means they likely would be unable to qualify for a short-term policy.
However, being exempt from some ACA mandates generally makes short-term policies more affordable to those who can get them. According to federal data, the average monthly premium in the fourth quarter of 2016 for a short-term plan was about $124 compared with $393 for a yearly plan that meets all the requirements of the ACA.
"Americans need more choices in health insurance so they can find coverage that meets their needs," said Alex Azar, secretary of Health and Human Services, in a statement when the rule was proposed.
However, AARP is concerned that if the rule is adopted, it could create a second, non-ACA-compliant marketplace that is basically a return to pre-ACA days.
"We've advocated building upon the improvements made [by the ACA] and strengthening that law," O'Reilly at AARP said. "So we see this proposal as a significant step back from that progress."