Written for Bluberry Pi Consulting by Kainoelani Lee
Newly proposed federal rules would “allow short-term health-care policies to span 364 days instead of the current three months”, according to CNBC. Unfortunately, short-term healthcare policies may result in higher premiums for elderly Americans aged 50 to 64, who rely on individual market coverage.
Short-term healthcare policies were initially meant for individuals who experience a temporary gap in health coverage. These policies are considered “major medical” coverage for a limited term, which is usually less than 365 days, according to the Henry J. Kaiser Family Foundation. Short-term healthcare policies are non-renewable, although, since 1996, Federal law has stated that all other individual health insurance must be a renewable option for the policyholder. Because of this, if an individual develops a health condition while covered by short-term healthcare insurance, they will not be able to renew coverage once the policy has ended.
“Senior citizens in the United States are, as a group, sicker than their counterparts in 10 other wealthy countries”, according to a recent study done by Health Affairs. With elderly Americans prone to severe illness, their premiums may require additional costs to afford short-term healthcare insurance than any other insurance available.
The short-term plan could leave older Americans at risk for excruciatingly high medical bills if they ever want to keep their monthly premiums at a low cost.
For elderly Americans with insurance under the Affordable Care Act (ACA), the proposal could cause an elderly individual to pay an average of $2000, added to their 2019 premiums. There are also several limitations to short-term healthcare insurance. These policies are exempt from many ACA consumer protections. Medical writing is also required to be eligible for this type of coverage, which means that the average policyholder, by medical standards, will be considered a healthy American. Because of this, “applicants with health conditions can be turned down or charged higher premiums, without limit, based on health status, gender, age, and other factors,” according to the Henry J. Kaiser Family Foundation.
This means that elderly Americans are likely to be charged more or denied health coverage based solely on their health and age. 40 percent of people ages 50 to 64 have a pre-existing condition, according to the AARP, the nation’s largest backer for elderly Americans, which could affect an older consumers qualifications for short-term healthcare.
The healthcare market could also flop with short-term plans due to “healthier” Americans purchasing these policies, leaving other healthcare insurers at risk of overspending due to mainly covering “unhealthy” Americans.
“We have advocated building upon the improvements made [by the ACA] and strengthening that law,” Megan O’Reilly, director of AARP’s federal health and family team said.
If the proposal is accepted, the AARP is worried that it could cause American healthcare to take a “significant step back from that progress.” Premiums are estimated to increase by an average of 16.4 percent by 2019, and perhaps even more in select states if the proposal is accepted, according to the Urban Institute. “Americans need more choices in health insurance so they can find coverage that meets their needs,” according to Alex Azar, secretary of Health and Human Services.
Federal Register (21 Feb. 2018.). Short-Term, Limited-Duration Insurance. Federal Register. Retrieved from https://www.federalregister.gov/documents/2018/02/21/2018-03208/short-term-limited-duration-insurance
Osborn, Robin (n.d.). Older Americans Were Sicker And Faced More Financial Barriers To Health Care Than Counterparts In Other Countries | Health Affairs. Healthaffairs.org. Retrieved from https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2017.1048
Linda J. Blumberg (23 Feb. 2018.). Updated: The Potential Impact of Short-Term Limited-Duration Policies on Insurance Coverage, Premiums, and Federal Spending. Urban Institute. Retrieved from https://www.urban.org/research/publication/updated-potential-impact-short-term-limited-duration-policies-insurance-coverage-premiums-and-federal-spending
Sarah O’brien (22 Mar. 2018.). Trump proposal could push health premiums up by $2K for older Americans. CNBC. Retrieved from https://www.cnbc.com/2018/03/22/trump-health-insurance-proposal-could-push-2019-premiums-up-by-2k.html