Several new short-term insurance plans are hitting the market in Louisiana, two months after the Trump administration issued a rule expanding access to the limited-coverage products.
The short-term plans don't have to meet 10 essential health benefits mandated under the Affordable Care Act, former President Barack Obama's signature health law. Those benefits include ambulatory services, hospitalization, emergency services and prescription drugs, among others. The short-term plans also aren't required to cover pre-existing conditions, as the health care law mandates for other types of insurance.
Critics say customers could wind up with insurance that doesn't cover what they think it does, while proponents say the plans provide a lower-cost option for people who don't have employer health insurance and make too much money to get federally subsidized coverage.
Five new insurers offered products this year for 2019 coverage, and five more amended plans to meet the new rules, according to the Louisiana Department of Insurance, meaning 10 insurers are making short-term offerings so far. The numbers are an uptick from previous years: five offered short-term plans in 2018, two in 2017, one in 2016 and five in 2015.
The Trump administration announced in August it was loosening rules on short-term, limited-duration health plans, which have traditionally provided stopgap coverage to people without insurance. The new rules allow the plans to expand from three months coverage to up to three years, leaving it up to insurers to offer the second- and third-year extension.
The new rules took effect Tuesday, making the products available for customer enrollments.
Frank Opelka, deputy commissioner of the Office of Health, Life and Annuity at the Louisiana Insurance Department, said the plans seen so far in Louisiana, from insurers like Vantage, Golden Rule, Philadelphia American and others, cover a similar amount of services as traditional insurance. But most have caps or other limitations on coverage — for instance, some plans put a cap on ambulance rides or hospitalization.
"This product is more about giving consumers options," Opelka said. "It's not necessarily going to be right for everybody, but it gives another option to them."
Proponents say the expansion will provide much-needed options to customers, especially as health insurance costs continue to rise in some places. Critics worry the expansion will continue to undermine the individual exchange known as "Obamacare" by siphoning healthy customers away from that market. The exchanges were created under the Affordable Care Act to provide insurance for people who don't receive it through their employer or other means. Most have low incomes and receive federal subsidies to help cover the cost of the insurance.
Louisiana's individual exchange saw years of double-digit rate hikes before insurers Blue Cross and Blue Shield of Louisiana and Vantage Health Plan, the only two that remain in the exchange here, posted a profit last year. Affordable Care Act rates will go down on average in 2019 by 6.4 percent.
The Louisiana Department of Insurance did not have estimates for how many people will enroll in short-term plans, and the products have traditionally covered a relatively small number of people. But the Congressional Budget Office estimates between the new rules for short-term plans and Association Health Plans, which give business groups more latitude in offering health products, more than 6 million people will use those products by 2023.
The agency predicted those people leaving the individual and small group markets for short-term plans or Association Health Plans will be healthier, resulting in price increases in the markets they left.
The state insurance department has so far approved nine short-term plans, and another is being reviewed. The plans are required to include disclaimers that make clear they don't cover everything traditional ACA plans cover.
The new rules on short-term plans likely won't cause a major shift in Louisiana's markets, Opelka said. But other changes, like the repeal of the individual mandate that required people to have health insurance or face financial penalties, could cause more people to leave the individual market, in turn allowing more people to go uninsured or choose short-term plans. The individual mandate no longer has to be advertised starting Jan. 1, when the repeal becomes effective.
"It's still going to have the gap-filling role," Opelka said. "You may have more people than you expect choose to or by necessity go without insurance, and now they have an option to pick up a product that isn't the same as what they would have had if they had gone for traditional insurance, but at least they aren't uninsured."
Blue Cross and Blue Shield of Louisiana, the state's largest insurer, said it plans to begin offering short-term medical products as a solution for people with short-term health insurance needs.
Spokeswoman Cindy Wakefield said the insurer is still working through final details, and will offer the products through its subsidiary, HMO Louisiana Inc.
"We believe these plans will be a good fit for some consumers who may not qualify for (federal) subsidies or have health coverage offered by an employer and are looking for comprehensive benefits," she said.
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