Some Much-Needed Relief for Healthcare Consumers

by Naomi Lopez
August 1, 2018

When it comes to healthcare, one size doesn’t fit all. That is why it is great news that the Trump administration issued its final rule to allow short-term limited duration insurance (STLDI), which will give some consumers more options when it comes to meeting their healthcare needs and preferences.

These “bare-bones,” short-term plans are not subject to ACA (Affordable Care Act, commonly referred to as Obamacare) regulations, including essential health benefits, guaranteed issue, and pre-existing condition protections. But they do offer an option to people needing coverage but who found ACA plans to be ill-suited, such as those between jobs or those who wanted inexpensive coverage for emergencies.

For some, ACA compliant plans were unaffordable. Premiums have more than doubled for those who don’t qualify for generous subsidies. For others, the ACA plans in their area have limited insurer or provider networks. More than half of the nation’s counties have only one ACA insurer. Others simply prefer to purchase catastrophic coverage, while others may wish to spend their hard-earned dollars in other priority areas.

The Obama administration restricted these plans in October 2016 to three months and prohibited renewability, limiting the choices for healthcare consumers. In today’s final rule, these policies are, once again, allowed for up to one year and are renewable. In April of this year, health policy experts and conservative/free-market advocates, including this author, provided comments to the administration requesting such a change.

These plans are expected to cost a fraction of the current ACA plans—50 to 80 percent less. This new rule will not only restore the availability of this more affordable coverage option; it expands the potential utility of these once-popular plans by making these plans potentially renewable for up to 36 months. The new rule also includes robust requirements that insurers inform consumers about the coverage limitations of these basic policies.

While it is difficult to estimate the impact of this policy change, it is important to note that there are 28 million people who remain uninsured today. Estimates vary, but this policy change could result in an additional 2 million consumers obtaining this type of short-term, renewable coverage.

While there is no silver bullet to the problems facing the American healthcare system, more healthcare affordability and choice provide an important step in the right direction. This modest reform allows more individuals and families the opportunity to best meet their own healthcare needs and preferences—free from top-down Washington rules and edicts.

Naomi Lopez is the director of healthcare policy at the Goldwater Institute. Find her on Twitter: @LopezBauman.