Groups representing health insurers and consumers on Thursday called on state insurance regulators to protect their residents against President Donald Trump's October executive order to ease insurance rules and open up access to skimpier, cheaper health plans.
The letter, signed by a hodgepodge of groups including the Blue Cross and Blue Shield Association, America's Health Insurance Plans and the American Heart Association, urged regulators to swiftly restore the Affordable Care Act's duration limits on short-term insurance plans, if federal rulemaking prompted by the executive order ends up allowing those plans to be sold long term.
The groups also urged states to consider ways to protect consumers if rules governing association health plans and health reimbursement arrangements are weakened by the Trump administration.
"We are concerned that this could create or expand alternative, parallel markets for health coverage, which would lead to higher premiums for consumers, particularly those with pre-existing conditions," the groups wrote. "Further, these actions destabilize the health insurance markets that guarantee access to comprehensive health coverage regardless of health status."
Trump in early October signed an executive order promoting short-term health plans, which are exempt from Affordable Care Act rules, and association plans that allow individuals and small employers to band together to buy insurance potentially across state lines.
While the Trump administration claimed the actions would provide people with more affordable options for coverage, the changes, depending on how they are implemented, could also harm the individual market, insurance experts said.
It's likely that healthier consumers would move into the cheaper, skimpier short-term plans, leaving the sickest people on the ACA exchanges. That would lead insurers to raise rates or exit the individual market completely. Short-term plans, which were limited to 90 days under the Obama administration and are not renewable, would be allowed for longer under the executive order.
Short-term plans were meant as a bridge to cover people who are between jobs, for instance. The premiums for the plans are lower because insurers don't have to sell the plans to people with costly pre-existing conditions. They can also exclude coverage for certain ACA-required benefits, like maternity care or prescription drugs. The plans aren't considered insurance under the ACA, so consumers who enroll in them may have to pay a penalty.
"If short-term plans are allowed to be sold as a long-term alternative to regular health insurance, they will attract healthier consumers away from the regular insurance risk pool and endanger people's access to comprehensive coverage," the groups wrote in the letter.
They pressed the states to continue limiting the length of time a consumer can enroll in a short-term plan. They also urged states to require clear disclosures to consumers about the nature of the plans.
States have broad authority to regulate short-term plans, according to a report by the Center on Health Insurance Reforms at Georgetown University. They can limit the length of short-term plans and ban renewals, as California and Minnesota already do. States could apply ACA individual market rules to short-term policies. Further, they could also require short-term plans to cover essential health benefits or ban them from excluding customers with pre-existing conditions.
Not all insurers are fighting the executive order. UnitedHealth Group and Aetna both told investors they are prepared to capitalize on it.
"We have a great deal of experience in the area covered in the order—short-term policies, association plans and expanded use of" health reimbursement arrangements, UnitedHealth CEO David Wichmann said during an October conference call with investors. "We will be engaging with policymakers as the regulatory frameworks in these areas are developed."
Aetna CEO Mark Bertolini also told investors in October that the company is considering launching short-term plans that last a year, but aren't just skinny benefits. "As soon as the executive order came out, we were on top of it," he said.