Last fall, President Donald Trump directed his administration to expand the availability of short-term, limited duration insurance (STLDI). To this end, federal agencies have proposed relaxing federal regulation of these plans. After a 60-day comment period, stakeholders submitted over 9,000 comments in response to the administration’s proposed rule. In previous blog posts, CHIR dug into a sample of comments from various stakeholder groups:
Insurers and brokers selling STLDI
Comments represented a range of perspectives, as would be expected, but common themes emerged across stakeholder groups.
The majority of comments opposed extending STLDI to 364 days
The Obama administration limited the duration of these policies to three months, hoping to keep short-term plans as a temporary solution to a gap in coverage, and limit the flow of healthy people out of plans that comply with the Affordable Care Act’s (ACA) rules. The Trump administration proposed abolishing this standard, instead allowing STLDI products to extend up to almost a full year, or 364 days of coverage.
The majority of the comments we reviewed were critical of the proposal to allow STLDI durations up to 364 days. Consumer and patient groups in our sample were unanimous on this front; in fact, a broader study of comments from health care groups including consumer and patient advocates, as well as providers, found that 95% of them opposed or criticized the proposed rule. In our sample, consumer and patient groups as well as state officials expressed concern that expanding STLDI in this manner would harm both consumers and insurance markets. Major medical insurers were concerned about adverse selection in the ACA-compliant market, and even some brokers selling short-term plans suggested a shorter duration. However, several states in our sample and the majority of brokers and insurers selling short-term plans approved of allowing short-term plans to extend up to almost a full year.
Stakeholders support upholding state authority to regulate STLDI
The proposed federal rule does not preempt state regulation of STLDI, and comments from every stakeholder group endorsed this decision. Stakeholders pointed out that states are the primary regulators of insurance, and asked that the final rule ensure their authority over STLDI. Almost all sellers of STLDI in our sample supported state regulatory authority, and many major medical insurers advocated for reaffirming states’ power to regulate their own insurance markets in the final rule. Not surprisingly, state officials unanimously supported state autonomy to regulate STLDI. Some states specifically asked that the final rule preserve their ability to prohibit or limit the duration of STLDI. One short-term insurer, however, suggested that the Trump administration promote a standard, national regulatory framework for these plans, which would inhibit state authority.
Many comments highlighted the importance of prominent disclosures
The proposed rule revises the notice that short-term insurers are required to include on contracts and application materials. Numerous stakeholders noted that prominent disclosures are key to ensuring that consumers understand the limitations of STLDI products. Several states mentioned that STLDI is a frequent source of consumer complaints due to misconceptions about the quality of coverage. Insurers asked that the final rule include stronger notice language, and some comments asked for a required disclosure that the ACA’s Essential Health Benefits (EHB) are not covered by STLDI. Some brokers and insurers selling short-term plans expressed similar concerns with the revised notice requirement, with one broker organization suggesting that STLDI materials include a comparison of STLDI and ACA-compliant coverage. Many consumer advocates asked that the notice language be made clearer, and that it be available in multiple languages.
Takeaways
The proposed STLDI rule has the potential to impact a big and broad group of stakeholders, demonstrated by the more than 9,000 comments submitted by consumer and patient advocates, insurers, state officials, and many others. While some stakeholders, such as sellers of STLDI and some state officials, support loosening federal restrictions, many stakeholder groups expressed significant concern with extending the duration of STLDI up to almost a full year. While expanding STLDI in this manner may provide young and healthier consumers with a cheap alternative to ACA-compliant plans, stakeholders argue that it leaves those who need more comprehensive coverage with fewer plan options and higher premiums by siphoning healthy risk from the market. Further, comments from every stakeholder group in our study supported upholding state authority to regulate short-term products, as well as prominent disclosure requirements. As the Trump administration finalizes the rule, they should take into consideration these criticisms and suggestions to ensure that consumers, insurers, and state-level consumer protections are not negatively impacted by a rule that purports to improve access to coverage.
To learn more about the Trump administration’s proposals, you can read our issue brief on the proposed rule here.