SUMMARY: Consumers Union comments to the U.S. Department of Health and Human Services and two other agencies, in response to the Tri-Agency’s proposed rule, CMS-9924-P on Short-Term, Limited-Duration Insurance.

CU support efforts to improve affordability and access to health coverage for all consumers. But fostering the growth of short-term plans devoid of the consumer protections under the Affordable Care Act would weaken, not strengthen, the health and financial security of consumers and destabilize the individual insurance market.

The Departments acknowledge that the proposed rule would result in:

  • Pared down benefits, and thus reduced access to some services, for those who buy STLD policies;
  • Potential tax penalties in 2018 for those who enroll in STLDs, since these policies do not constitute “minimum essential coverage”;
  • Increased out-of-pocket costs related to excluded services, and thus financial hardship for some consumers;
  • Weakening of States’ individual market risk pools, with a consequent increase in premiums for comprehensive policies;
  • Reduced choice of plans for some consumers if, due to the worsened risk pool, some carriers withdraw from the individual market; and
  • Increased federal payments for Advance Premium Tax Credits—between $96-168 million—if, as expected, the individual market risk pool worsens and premiums rise in that market.

Consumers Union, and the majority of consumer commenters and policy experts, thus believe that the negative effects of expanding availability of STLDs by far outweigh the positives. It would leave millions of consumers and patients in STLD plans with insufficient coverage and unexpected medical bills – just as occurred before the ACA provided more oversight and protection – while millions more consumers will lose access to affordable, comprehensive insurance coverage. Thus we strongly urge the Departments not to move forward with finalizing the rule.

If the Departments elect to do so, we urge them to improve upon the notice to consumers about the deficiencies in these plans; not allow the STLD plans to be renewed; delay implementation to give insurers and states adequate time to adjust; and ensure state flexibility and authority so states can decide how best to protect their residents, including by barring such plans.

A better approach would be to press forward with plans to stabilize the individual and small group markets and to expand affordability programs to more Americans.