Medicare's own actuary confirms the deleterious consequences of short-term health plans

Trump’s Plan for Cheaper Health Insurance Could Have Hidden Costs

By Robert Pear
The New York Times, May 15, 2018

President Trump’s plan to expand access to skimpy short-term health insurance policies, as an alternative to the Affordable Care Act, would affect more people and cost the government more money than the administration estimated, an independent federal study says.

The study, by Medicare’s chief actuary, suggests that the new policies would appeal mainly to healthy people, including many who have had comprehensive coverage under the Affordable Care Act.

The administration estimated in February that a few hundred thousand people might sign up for the “short-term, limited-duration policies,” which would not have to provide the standard health benefits like preventive services, maternity care or prescription drug coverage.

But the chief actuary, Paul Spitalnic, estimates that 1.4 million people could sign up for the short-term policies in the first year, with enrollment reaching 1.9 million by 2022.

The new policies would probably attract people who do not need the full suite of benefits guaranteed by the Affordable Care Act, Mr. Spitalnic wrote in a recent memorandum.

Those remaining in Affordable Care Act marketplaces “would be relatively less healthy,” Mr. Spitalnic said, and as a result, the average premiums for those insurance policies would increase.

The Trump administration estimated the extra cost to the federal government at $96 million to $168 million a year.

But the chief actuary, whose independence is protected by federal law, estimates that the rule proposed by the administration could increase federal spending by $1.2 billion next year and by a total of $38.7 billion over 10 years.

Short-term insurance policies were originally intended for people who were between jobs or needed temporary coverage for other reasons. Under the proposed rule, they could play a larger role.

“There is nothing in the proposed rule that would prevent companies from underwriting and issuing new policies to individuals at the end of the one-year coverage term,” Mr. Spitalnic said.

Under the Affordable Care Act, the most popular type of marketplace plans, so-called silver plans, cover 70 percent of health care costs for a typical population. By contrast, Mr. Spitalnic said, the new short-term plans would cover 50 percent of costs, on average.

Short-term plans can exclude coverage for pre-existing conditions and can omit some benefits deemed essential in the Affordable Care Act.

Thus, for example, some short-term plans offered by UnitedHealth Group do not provide prescription drug coverage and do not pay expenses related to a normal pregnancy or the treatment of mental disorders, according to a brochure from the company.

American Academy of Actuaries; Re: CMS–9924–P—Short-Term, Limited-Duration Insurance:

Addendum: the link to the report from Medicare's chief actuary:



By Don McCanne, M.D.

There have been extensive reports on the Trump administration's proposed rule that would greatly expand the use of skimpy, bare-bones, short-term health insurance policies. These reports have shown that this rule would greatly expand the prevalence of underinsurance - policies that fail to provide adequate financial protection in the event of medical need. It would result in adverse selection within the standard plans - driving insurance premiums up, thus making them less affordable. This would cause many to forgo insurance altogether - increasing the numbers of uninsured.

The reason today's report is significant is that it comes from Medicare's own chief actuary, Paul Spitalnic. He confirms the adverse consequences of expanding the use of short-term policies, yet the rhetoric coming out of HHS/CMS and the White House continues to tout the affordability of these plans while remaining silent on the severe adverse consequences.

I did an extensive search to try to access the chief actuary's report. If it is available, they did a good job of hiding it (which would be understandable since it is contrary to the administration's con job that is being being foisted off on the American public). Lacking his report, I have included a link to a highly credible report on this proposed rule submitted to HHS/CMS by the American Academy of Actuaries, which, once again, confirms the deleterious consequences of this proposal. (Edit: the chief actuary's report has been added as an addendum, above.)

The administration has the true facts at hand, yet they have shown no inclination to act on those facts. We need to hold President Donald Trump, HHS Secretary Alex Azar, and CMS administrator Seema Verma personally responsible for the physical suffering and financial hardship that they are about to inflict on too many of us.

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