Trump-backed short-term health plans introduced, but not supposed to move in Senate

A GOP bill introduced last week in the Michigan Senate takes aim at Obamacare, loosening regulations for short-term health insurance plans. But its future is uncertain.

These policies have been a favorite of the Trump administration. In August, it issued a new rule allowing for plans that last up to 364 days, with an option to extend coverage up to 36 months.

“We will deliver relief to American workers, families, and small businesses, who right now are being crushed by Obamacare, by increasing freedom, choice and opportunity for the American people,” Trump said in a statement announcing the new rule.

Senate Bill 1224, sponsored by state Sen. Peter MacGregor (R-Rockford), has been overshadowed by Lame Duck fights over a minimum wage hike and paid sick leave; securing the Enbridge oil pipeline under the Straits of Mackinac; and legislation stripping authority from Gov.-Elect Gretchen Whitmer, Attorney General-Elect Dana Nessel and Secretary of State-Elect-Jocelyn Benson.

The bill has been referred to the Michigan Competitiveness Committee, which is chaired by Sen. Mike Shirkey (R-Clarklake), the incoming Senate majority leader.

Leah Maher, MacGregor’s legislative director, told the Advance on Monday morning that the bill would not be taken up for consideration during the Lame Duck session and she wasn’t sure whether it would be re-introduced next session.

Nonetheless, many Republicans tout short-term health plans as cheaper alternatives to comprehensive insurance plans, which the Affordable Care Act (ACA) requires to cover 10 essential health benefits, including maternity care, emergency room care, prescription drugs, substance abuse treatment and hospitalization.

SB 1224 would allow for short-term insurance policies to last a full year, rather than six months, as Michigan law currently allows.

GOP attacks on Obamacare

This is not the first time that Michigan Republicans have sought to weaken Obamacare. Gov. Rick Snyder this year signed a law mandating Medicaid work requirements. Slipped into the legislation is a provision that the Medicaid expansion would end if the Trump administration doesn’t approve waivers.

The ACA allows states to offer Medicaid to more people. In Michigan, those who earn 133 percent above the poverty level — about $30,000 a year for a family of four — are eligible. So far, it’s resulted in roughly 700,000 people gaining health insurance. Outgoing AG Bill Schuette, who lost his gubernatorial bid last month, has been a frequent Obamacare critic and has joined lawsuits against it.

The MacGregor bill mandates that plans include coverage for emergency, hospital, physician, laboratory and X-ray services. It also stipulates that insurance providers “provide a description of plan services covered that must be prominently displayed on the application for coverage and the coverage agreement.”

SB 1224 would also include a 10-day “free look” period during which consumers could get a full refund on their plan.

Charles Owens, state director in Michigan for the National Federation of Independent Businesses (NFIB), a trade association for small businesses, said he was “very disappointed” that MacGregor’s legislation doesn’t appear to be moving forward this term.

Owens said he believes that short-term policies make for “an important option” for small business owners, particularly in rural areas where he said ACA exchange have few offerings for health plans.

“They’re stopgaps and they’re helpful to a lot of small businesses,” Owens said. “We’re very disappointed Michigan will not be changing its laws.”

#Junkplans?

Charles Gaba is a health care policy expert in metro Detroit who founded ACASignups.net, a website that tracks Obamacare data and health issues. He calls short-term health insurance policies “#junkplans” and “#ShortAssPlans.” While they may be almost half the cost of more comprehensive plans covered under Obamacare, he said it’s because they often don’t offer much coverage.  

“The reason they are so cheap is basically the very thing the ACA was trying to tackle in the first place, which is that they have massive holes in coverage,” Gaba told the Advance. “They’re medically underwritten, so in order to enroll in one, you have to give your whole medical history and they can deny you coverage for just about anything, i.e. the whole ‘preexisting condition’ thing.”

Pre-existing condition coverage became a big issue in the 2018 election. Obamacare mandated that insurance companies can’t deny people coverage for pre-existing conditions such as cancer, diabetes, asthma and heart disease.

GOP legislation in Congress, which failed to pass this term, would have gutted protections. Republican attorneys general also have filed a lawsuit that the ACA’s pre-existing coverage protections are illegal, which the Trump administration supports.

Gaba wrote a blog post over the summer highlighting the impact that short-term plans have had on raising premiums overall.

“A couple of carriers made references to #ShortAssPlans as well, and Priority Health (which is lowering rates slightly) went as far as to include a bold-faced warning at the top of their filing about the potential impact of #ShortAssPlans on 2019 premiums,” Gaba wrote.

Other states banned short-term plans

Many states have gone in the opposite direction of the new bill in Michigan. They have banned short-term plans altogether, or severely limited them to be available for purchase for just a few months. Gaba notes that short-term plans are largely intended to be available just as a carryover for people in between jobs or other such life events.

States like Maryland, Illinois and Vermont have all passed recent legislation that limit the plans to three months, according to reports. Virginia’s Democratic governor, Ralph Northam, vetoed in May four different pieces of health care legislation, one of which would have expanded short-term plans in the state.

“This legislation would place consumers at risk of being underinsured and would fragment Virginia’s federal Marketplace risk pool, leading to rapidly increasing premiums,” Northam said in a statement.

Business advocates like Owens with the NFIB, however, note that most consumers looking at purchasing short-term plans are aware of the risks they can carry.

“Most of the time, people looking for those policies are well aware that they’re ACA non-compliant,” Owens said. “If you assume people are dumb and the government has to take care of them, it makes sense [to limit them]. But business owners aren’t dumb.”