Short-term medical plans have transformed the Affordable Care Act (ACA) for consumers seeking a way to pay the growing cost of healthcare. More Americans are taking advantage of healthcare coverage provided by short-term medical plans instead of participating in the government healthcare marketplace exchanges.
These short-term medical plans were originally offered for those who expected to be out of an existing healthcare plan for a brief period such as during a job change or while waiting to become eligible for Medicare. Unlike ACA-compliant marketplace plans, short-term medical plans don’t come with comprehensive benefits or guaranteed coverage for preexisting conditions.
While these temporary plans are customized to an individual’s needs, they may fall short if you experience an unexpected illness or injury. Even with coverage, short-term medical plans can leave the insured at risk for financially devastating medical bills if they don’t choose carefully.
Short-term medical plans do have one thing consumers want. They often come with premiums that are MUCH less expensive than healthcare plans offered on the marketplace exchanges.
Rising premiums may be the single strongest driving force behind most consumer decisions to leave ACA plans. From 2016 to 2017, average monthly premiums increased 18 percent for individuals with coverage through the exchange.
Some states saw premiums skyrocket. Marketplace consumers in Arizona saw their premiums increase a whopping 116 percent in 2017.
Recent Changes
In recent month, Americans have experienced shifting perceptions of the ACA and what’s deemed essential for consumers to meet their healthcare insurance needs. Whether coverage is even necessary may be another issue facing Americans considering that the first 30 days of the sign-up period have undergone a drop of 11 percent over the previous year’s enrollment.
Only about 3.2 million people enrolled during that first month or about 400,000 fewer than in the previous year. These numbers are surprising given that healthcare was the most popular issue among voters in the 2018 midterm elections.
The ACA’s Open Enrollment starts November 1 and runs through December 15. Consumers who miss choosing healthcare in the marketplace exchange can take advantage of a Special Enrollment Period (SEP).
SEP opens up when people have a qualifying event that allows them to obtain insurance through the marketplace. This is usually for 60 days after they become eligible due to their individual circumstances.
Qualifying events are numerous and include the loss of employer-sponsored insurance, divorce, aging out of a parent’s plan, or losing coverage on a government program such as Medicaid, among many others. However, it seems that many consumers are seeking options with lower monthly costs and trying to avoid the exchanges altogether.
Even with the availability of federal subsidies, not everyone is willing to pay the higher premiums that come with an ACA-compliant major medical plan. According to data by eHealth, an online private healthcare plan exchange, during the first half of Open Enrollment for 2018, 56 percent of the company’s customers opted for short-term coverage, and 44 percent selected plans without government subsidies.
End of a Mandate
The sluggish participation in the federal government’s platform, healthcare.gov, is likely due to the repeal of the ACA provision known as the “individual mandate.” Another provision of the law that was changed was the definition of “short-term,” which transformed from less than 90 days to a year. In fact, some policies may now be renewed for up to three years.
This controversial individual mandate required that most consumers purchase healthcare or pay a penalty—unless they managed to obtain an exemption. This unpopular portion of the ACA was repealed in 2017 with passage of the Tax Cut and Jobs Act, after several failed attempts at a full reform of the legislation.
Due to legal challenges, the entire ACA is in jeopardy with various courts across the nation hearing cases that may further impact the beleaguered Obama-era law. For now, consumers won’t face fines for not having insurance under government-approved plans for 2019.
It seems that short-term medical plans are disrupting the healthcare marketplace that politicians in Washington had tried to carefully control. When the dust settles and the lawsuits have come to an end, consumers may find they don’t need—and don’t want—government-subsidized major medical after all.
Short-term medical plans may evolve into the types of options consumers want at a price point they’re willing to pay while allowing companies to manage risk. Insurers may have inadvertently found a way to appease consumers’ desire for lower premiums while meeting their long-range goals and business modes.
The death of the ACA may be in the near future. We may find it replaced by short-term insurance.
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