The Trump administration has been pushing for the return of short-term health plans and association health plans, two types of coverage that are exempt from Affordable Care Act requirements and could offer an affordable alternative to consumers who feel priced out of the Obamacare marketplace. But some California advocates say these plans offer shoddy coverage and pose a threat to the stability of the healthcare system.
Before the Affordable Care Act required plans to cover essential health benefits and take patients with pre-existing conditions, association health plans gave small businesses an option to band together and buy their own insurance.
But the plans weren’t well-regulated, and many of the companies providing them went belly-up, according to Michael Lujan, West region market director for Oscar Health.
“That’s the worry that California has, at least some in the Legislature,” he said, “that we might be returning to the old Wild West days, pre-ACA, with what’s sometimes termed as ‘swiss cheese benefits,’ policies that have a lot of holes.”
But David Fear, president of the California Association of Health Underwriters, said association health plans could be an affordable option for small businesses, as long as they’re properly regulated.
“We're big fans of the ACA, don't get me wrong,” he said. “But many of our clients who are small employers are complaining about the fact that their insurance rates continue to skyrocket.”
They could turn to short-term insurance plans, which typically last just a few months and provide limited benefits. The Trump administration recently proposed removing Obama-era restrictions on these plans.
The idea is facing resistance in California, where Covered California has aggressively tried to grow the individual market. A recent California Health Care Foundation issue brief stated that “elimination of the individual mandate penalty and the proposed expansion of short-term plans would create the perfect storm that could take healthy consumers out of Covered California and lead to increased premium rates.”
The Urban Institute, a D.C.-based policy and economics think-tank, estimates that average premiums in the ACA-compliant individual insurance market could rise 18 percent in states that don’t ban or limit short-term plans.
Democratic state Sen. Ed Hernandez, chairman of the Senate health committee, has a bill moving through the Legislature that would ban short-term plans in California. Anthem Blue Cross opposes the bill on the basis that short term plans should be available for occasions when comprehensive coverage isn’t immediately available.
The bill is part of a wider effort from universal health care advocates to keep as many Californians as possible insured in Medicaid or the individual marketplace.