CMS and HHS released the final rule on short term, limited duration plans last night.
Plenty of other wonks have long and detailed analysis. I just want to highlight some quick thoughts.
- There will be lawyers and lots of them.
- CMS is allowing “limited duration” to be equal to 364 days with 2 renewal periods. Law professor Nick Bagley thinks that these regulations fly in the face of “limited duration” and “short term”
- The fine print will also be a source of lots of litigation. Currently short term plans have massive sets of exclusions, gaps, loopholes, waiting periods and upcharges.
- ACA insurers have had enough time to price appropriately — this is not a surprise (unlike Obama administration allowing for “transitional/grandmother” plans in the Fall of 2013 after rates were set for 2014.)
- Stressed out ACA insurers will respond by raising rates a lot
- Not stressed out ACA insurers will respond by raising rates a little
- Combination of confidence in actuarial projections and covered populations will define “stressed out”
- Plan quality/insurance quality varies
- Some underwritten plans will be bottom feeding junk plans
- Some underwritten plans will be pretty decent insurance for the people who can pass underwriting
- Junk vs. decent will mostly be up to state regulators and the playing fields defined by state law and state approval requirements.
- There are winners and losers
- Winners — people not getting subsidies who are healthy enough to pass underwriting. They will see much cheaper premiums. Just make sure you are 100% certain that your needs will be covered.
- Winners — people who get small subsidies and can pass underwriting. They will see cheaper premiums. Just make sure you are 100% certain that your needs will be covered.
- Winners — insurance brokers as they get good commissions on these plans
- Indifferent — well subsidized individuals in the ACA market without regard to health status. Depending on local conditions and what plans people buy net of subsidy premiums may slightly change in either direction due to higher index rates.
- Losers — people who make too much for subsidies and can’t pass underwriting. Their ACA guarantee issue premiums just got more expensive than they otherwise would have been.
- Senator Cassidy (R-LA) continually brought up a family of 4 earning 6 figures whose daughter had epilepsy and they paid ~$40,000/year for health insurance. He contends that is why the ACA needs to be thrown out. This family will be worse off with this policy change in effect.
Paul W.
Just to check if I understand why existing insurers with “long-term” plans are going to be raising rates – this is because the pool of people they expect insure is going to be worse quality as those that can be underwritten migrate to short-term plans?
Thanks!
Yarrow
A few questions:
1. “Pass underwriting.” What does that mean? Is it like the old style of having to list every health issue you’ve ever had and they’re all excluded? So, basically it means no pre-existing conditions coverage? Or is it something else?
2. How do you make sure your needs are covered?
3. If you get sick or have an accident are they allowed to drop you?
David Anderson
@Paul W.: Pretty much — underwriting plans will be offered to healthy/low risk to be expensive folks leaving the ACA pool to have higher average expected morbidity/costs than it otherwise would.
@Yarrow: Pass underwriting = fill out a 16 page questionnaire and have nothing in your medical records that makes an actuarial rubric nervous.
2) Speak with an agent who understands the fine print
3) Recission and post-claims underwriting may or may not be allowed (depends on the state). In the case of a cancer diagnosis that happens 6 months in where the insurer pays with no problem, they won’t offer you a plan at the end of the 364 day term. At that point, you have to go to the ACA pool (CAVEAT — some states require guaranteed renewability.
Yarrow
@David Anderson: Thanks! So, it’s “no pre-existing conditions covered” again. Back to the bad old days.
As for 3, that doesn’t seem very smart for most people. Maybe young people in their early 20’s who can’t get on their parents’ plants for whatever reason. And that would exclude anyone who is even considering getting pregnant.
dlwchico
Just got back from a half hour wait and $45 copay just to get weighed, have my BP checked and then have a PA spend 3 minutes with me to say “We’ll check this again in a month and if it’s good we’ll see you again in a year”. :(
John Fremont
@Yarrow: Knowing young adults though, I hope they don’t need ambulance service after they wreck their motorcycle on an interstate or crash into a tree while snowboarding. These short term plans don’t cover much on ambulances. As more of the population has retired and gone on Medicare and Medicaid, those programs pay at cost. Private insurance plans is where ambulance companies make their profits. Those short term plans don’t cover much. Ground ambulance is expensive enough, 24 hour helicopter medevac is that amplified.
StringOnAStick
This is why my husband had to keep his job rather than become a part time software Contractor, which his company was OK with him doing. We both have pre existing conditions, and puts us in the “totally screwed” category as far as buying in our own goes. We knew they’d get around to bringing back pre existing conditions and higher costs based on age. We would gladly exit the labor pool and let younger people have the jobs but we’re under 65.
Bob Hertz
Speaking of winners, the insurers who sell these plans will make tons of money. Very few claims in the first year, and if a condition pops up they can refuse to renew. These high profits are why they can afford to pay high commissions.
Read a complete short term contract some time. Many many exclusions, and opportunities for post claim underwriting. State insurance departments had better staff up