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Press release
February 20, 2018

Trump Administration Proposes Sale of Sham Insurance, Turning Back the Clock to When Insurers Could Discriminate against People with Pre-existing Conditions

Washington, D.C. Today, the Trump administration proposed another policy that threatens the health care and financial security of children, parents, and other adults. The draft rule released by HHS allows insurance companies to sell sham insurance plans that do not cover essential health benefits or preexisting conditions, protections that are required under the Affordable Care Act (ACA). More specifically, the rule allows short-term, sham insurance plans, which currently may only be sold for a coverage period of 3 months, to be sold and marketed for up to 364 days. These sham plans can include fine print that, for example, would exclude coverage of asthma, diabetes, or cancer treatments, exclude critical services like pharmacy or maternity care, or include hidden limits, like covering only two days or no days of hospital care a year. View our analysis of the proposed rule.

Following is the statement of Frederick Isasi, executive director of Families USA:

“This new rule demonstrates this administration’s intent to replace comprehensive coverage for individuals and their families with plans so unreliable they cannot rightly be considered health insurance.

“The Trump administration’s rule runs counter to what President Trump promised the American people. He said he’d provide ‘great health care for a fraction of the price.’ Yet, his administration is giving insurance companies the green light to sell sham insurance to vulnerable families. These junk plans can deny payment of medical bills for a range of common health care services -- from prenatal care to urgent care following a child’s accident on the soccer field – sticking consumers with the bill for care not covered by their plan.

“Before the Affordable Care Act, hundreds of thousands of Americans a year declared bankruptcy because their health insurance didn’t cover critical services and, therefore, didn’t provide real financial protection. Since passage of the ACA, the number of bankruptcies has been cut in half. This new Trump administration rule could cause thousands of families to lose everything they’ve worked so hard for when they are struck by illness or injury and their health plan does not protect them from financial ruin.

“Even healthy individuals who purchase short-term plans are vulnerable. If they have an accident or fall ill, like break a leg or get a bad case of the flu, they will find these plans provide little or no coverage for the services they need, or the plan may even retroactively cancel their coverage at the very time they need it most. On top of that, they will not be able to enroll in a comprehensive plan offered in the marketplace until the next open enrollment period.

“The consumers who buy these plans won’t be the only ones harmed by the Trump administration rule. These sham plans are likely to cause the price of comprehensive coverage to escalate if healthier individuals and families exit the marketplace where comprehensive coverage is sold and instead buy these junk policies.”