How the Obama Administration is Limiting Short-term Health Insurance Policies

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Aiming at trimming down the increasing healthcare cost and regulating the industry of healthcare, the Affordable Care Act (ACA) majorly focuses on delivering cost-effective, improved quality healthcare resolutions to an extensively large number of American citizens. There are various health insurance policies in India and other countries, including the United States of America, which have a large number of banned features and the Obama administration seeks to limit those short-term policies. This proposal could result in a crimped business of some profit-making health insurance companies.ID-100390819

As per the newly proposed rule, these insurers would only offer short-term insurance policies going forward, which last for not more than three months. Once the policy term is over, it cannot be renewed. With this, there would be no gap that enabled healthier consumers to purchase short-term policies for up to one year, being a cheaper alternative to plans offered by ACA.

On Wednesday, 8th June, the Department of Health and Human Services released a proposal and various other initiatives in order to trim down the rising pressure on the premiums payable for health plans by ACA. These activities are aimed at bolstering the incidence of healthier, cost-effective consumers across the insurance pools of health law marketplaces.

These short-term health plans often be short of various benefits that are typically offered by ACA plans and fail to cover pre-existing diseases whatsoever. Correspondingly, the consumers have to acknowledge that they are healthy by filling out the forms. Besides, these plans do not comply with coverage standards of ACA, and thus, are not acceptable as health plans for individuals.

Consumers, even after purchasing these short-term policies, do not save themselves from various penalties because of lack of sufficient coverage. However, the sales of these policies have surged because the major provisions of the law came into effect later in 2014. Approximately 147,000 consumers applied for short-term policies on EHealth Inc’s website in 2015, which is slightly less than those from 2014.

Needless to say, these short-term plans are cost-effective in comparison to any ACA plans, as they offer fewer benefits. Consumers often tend to have spent fewer on healthcare costs. In contrast, these low-cost policies generate high-profit margins for those insurance companies, partly though. This is because there is no need to meet ACA rules and they save a lot on healthcare expenses. These short-term plans have been very popular and such a high popularity put a challenge in front of ACA to establish its marketplace. This involved drawing off healthy people to help ACA make its business a success.

Obama administration, while declaring the newly proposed rule on coverage offered by short-term plans, pointed on the details of how the sales of short-term plans are increasing and their implications – how they are used as alternatives to ACA plans. The applications of the newly proposed rule would make purchasing short-term health plans very difficult, as they cannot be realistically used as ACA plans’ alternatives. Those plans were nothing but back-end substitutes and they would soon be closed.

Insurers have generated too much as the revenue over the years while new proposed rules would possibly impact strongly on the sales of short-term health plans.

A spokesperson for a health insurance company said that the market of short-term plans is growing at a faster pace, thereby serving the needs of people, and the new rule should not adversely affect the consumers. On the flip side, some people seek coverage for over three months. United Health Group earlier said that their short-term health plans are aimed at filling gaps in the coverage availed by consumers. The company, nowadays, claims to have been reviewing the new proposal. The Obama administration also intends to amend the ways how various health plans compensate one another across the system termed Risk Adjustment.

In order for implementing the initiative that has been announced earlier, the federal regulator unveiled both timing and details. This will purposefully boost the requirements of people enrolling in plans by ACA beyond the open enrollment period of annual fall.

Besides, the department is looking forward to getting in touch with the consumers having plans on “the health law’s exchange”, aiming at providing them the adequate information about how they can enroll in Medicare since they are about to turn 65.

 

Image courtesy of [everydayplus] at FreeDigitalPhotos.net

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