New Data Show Catastrophic Impact of Trump Administration Short-Term Plan Rule

Today the Urban Institute released national and state projections of the potential impact of a proposed rule from the Trump administration to expand the sale of short-term health plans. The projections are, in a word, catastrophic.

Combined with the repeal of the individual mandate, the new rule would lead to 9 million more people going uninsured or without minimum essential coverage relative to current law, almost a third of which is attributable to the new short-term plan rule.

This would be a reduction of over 40% for the nongroup market as a whole. In states with small or rural  populations, the results would be even more dramatic: reductions of over 50% in nongroup coverage in 11 states from the new rule and repeal of the individual mandate combined, with one-third to one-half of the impact coming from the new short-term rule alone.

The reductions would be paired with dramatic increases to premiums for plans that do not discriminate against people with preexisting conditions of more than 18% nationallyand more than 20% in more rural or smaller states.

Proposed Trump administration rules weaken Affordable Care Act protections

The Affordable Care Act established basic insurance protections for individuals and small businesses buying health insurance on the nongroup market. These have overwhelming popular support—they include guaranteed coverage with nondiscriminatory premiums for people with preexisting conditions, coverage of a basic package of essential health benefits, and limited ability to vary premiums by age.

Last year, the Trump administration and Republican congressional leadership tried a frontal assault on those protections, trying to repeal them in statute. When that effort failed in the face of massive public opposition, the Trump administration began an effort to undermine the ACA marketplace using its regulatory authority and via the legislative repeal of the individual mandate in the December Tax Bill.

Short-term plans are subject to different rules

The ACA always exempted “short-term” plans from the insurance guardrails that apply to regular nongroup coverage: These plans were intended to cover travelers or other people who need 1 to 3 months of coverage to fill gaps in between more permanent insurance arrangements. Last week the Trump administration proposed to greatly broaden the definition of “short-term” to be up to 364 days and then renewable indefinitely, allowing the creation of a parallel system of nongroup coverage that does not comply with core insurance protections around premiums, benefits and preexisting conditions.

View our fact sheet on the proposed rule: Seven Reasons Short-Term Health Plans Are Harmful for Families

The administration tried to downplay the impact of this change in its regulatory filing. But independent analysts were deeply concerned. The proposal amounted to a bifurcation of the nongroup market very similar to what Sen. Ted Cruz proposed in 2017, in a proposal opposed by numerous major health insurance and medical provider and consumer organizations.Similarly, a broad collection of insurance, provider and consumer groups expressed deep concerns about the Trump Administration’s executive order authorizing the brazen effort to undermine insurance protections by dramatically widening the short-term plan exception.

Trump administration should withdraw this rule

There is still time for the Trump administration to back off of its proposed rule or, more realistically, for Congress to intervene to stop this dangerous bifurcation of the non-group market.  Now we have a quantified demonstration of what is at stake.