The Short-term Limited Duration final rule released this morning by the Trump administration is rather inconsequential to the US Medical Economy and Insured Medical Consumers. According to the rule, there were but 160,600 lives covered by Short-term Limited Duration health insurance at the end of 2016, representing just $146 million in premiums paid. That hasn’t stopped health policy wonks – including those in the Trump administration – from making a big deal out of finalization of the rule.
Admittedly, it is a big deal for HIIQ which finally gets out from under a political cloud that has hovered over it since June 2016. They were never in danger, of course. The Obama administration’s attempt to rein in the use of Short-Term Limited Duration plans went only as far as federal jurisdiction of the sale of health insurance allowed – which is not very far. State insurance commissioners, on the other hand, seemed perfectly content to permit the sale of the limited plans which they did.
The rule as finalized contains the following provisions:
- Short-term Limited Duration plans are defined as less than 12 months with up to two renewals/extension for a total of 36 months. The rule reverses Obama-era policy which defined Short-term Limited Duration insurance as lasting three months even after considering renewals and extensions.
- Plan communication and contracts must contain warning language explaining that the policy does not meet the requirements of Minimum Essential Coverage (relevant for 2018 only) under the ACA and that certain services may not be covered.
- The 36-month duration provision is declared severable from other parts of the rule so that in the event of an adverse court order, the 12-month policy term would still apply.
Although the rule is good news for HIIQ, it is worth noting that the company appears to have benefited from the upheaval of the individual market in recent years, especially as expressed by premiums. At least based on the limited evidence to date, CY 2019 premiums appear to be moderating after several years of steep increases, which could limit the incentive to enroll in Short-term Limited Duration plans in the future.
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