Trump expands non-ObamaCare plans in effort to open up cheaper options

The Trump administration on Wednesday finalized rules expanding non-ObamaCare health insurance plans in an effort to provide cheaper health insurance options.

Officials are expanding short-term health insurance plans so that they can last up to a year, lifting a limit of three months imposed under former President Obama.

The administration touts these plans because they offer lower premiums for healthy people but, on the other hand, the plans do not need to follow ObamaCare rules, meaning they can charge people with pre-existing conditions higher premiums and leave out coverage of certain health services.

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Democrats attack the plans as “junk” insurance and say the move is part of the administration’s efforts to “sabotage” ObamaCare.

Insurers have also warned that the move will raise premiums for people remaining in ObamaCare plans, since some healthy people will be siphoned off into the new short-term plans.

Randy Pate, deputy administrator of the Centers for Medicare and Medicaid Services, said the new plans would “provide an affordable option to many people who have been priced out of the current market under the ObamaCare regulations.”

Trump administration officials argue that the plans would be appealing to people who currently cannot afford coverage at all, and pushed back on Democratic arguments that the ObamaCare exchanges would suffer when healthy people left them for the new, cheaper plans.

“We don’t expect there to be significant migration away from the exchange,” said Jim Parker, senior adviser to the Health and Human Services secretary, noting that most people on the exchanges get subsidies to help them afford coverage and so are likely to stay. He said these plans would appeal to people who make too much income to qualify for subsidies and are left facing extremely high premium costs.

The Congressional Budget Office (CBO) earlier estimated that the proposed version of the regulation, combined with a similar rule opening up what are known as Association Health Plans, will raise ObamaCare premiums by 2 to 3 percent.

The CBO estimated that 2 million people would sign up for the short-term plans.

In a potentially controversial move, the administration is allowing the short-term plans to be renewed to add up to a total length of three years. Officials argued the regulation is still legal and still meets the definition of “short-term” because there is still some cap on the length.

Parker acknowledged that the new plans are not as comprehensive as ObamaCare plans. “We make no representation that it’s equivalent coverage,” he said.

But he added: “We’re looking to do everything we can to take incremental steps that will make insurance coverage of any type more affordable.”

The Blue Cross Blue Shield Association, a health insurer trade group, warned of the effects of the new rules in a statement on Wednesday.

Justine Handelman, the association’s senior vice president, warned that the new slimmed-down plans have “the potential to harm consumers, both by making comprehensive coverage more expensive and by leaving some consumers unaware of the risks of these policies.” 

Democrats warned the move would undermine protections for people with pre-existing conditions.

“By giving the green light to junk plans, Trump and his administration are once again siding with fraudsters, unscrupulous brokers and insurance companies over unsuspecting Americans that simply want affordable health care,” said Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee.

Larry Levitt, a health policy expert at the Kaiser Family Foundation, warned that the short-term plans offer a “parallel market” that does not “have to follow any of the ACA’s rules.”

“The Trump administration cannot eliminate the ACA’s insurance rules,” Levitt tweeted. “Instead, they are using short-term insurance plans to create a parallel market of insurance plans that do not have to follow any of the ACA’s rules.”

Updated at 9:03 a.m.