[F]or the second time this year, Vermont officials are moving to counteract major changes in federal health care regulations.
The state Department of Financial Regulation soon will file rules requiring short-term, limited-duration health plans to provide more benefits. The move comes in response to the federal government’s expansion of those plans, which is effective this month.
Federal officials say short-term plans provide more affordable coverage options to those who’ve been priced out of the market. But Mike Pieciak, commissioner of the Department of Financial Regulation, said that affordability comes with too much risk due to a lack of benefits.
“They’re less expensive for a reason,” Pieciak said. “It’s because the coverage isn’t nearly as robust.”
As health care and prescription drug costs continue to rise, President Donald Trump’s administration has been loosening Obama-era health care regulations in the name of increasing affordability.
One such change is this year’s expansion of association health plans, which allow smaller employers to band together to offer coverage. That is supposed to make it easier for small businesses and their employees to get insurance.
But the expansion of association plans prompted Vermont officials to issue an emergency rule requiring those plans to cover the 10 essential health benefits required of standard insurance. State officials, who are now finalizing their new association rule, say they’re trying to protect consumers and keep Vermont’s insurance market stable.
The Trump administration also has authorized the expansion of short-term, limited-duration health plans. Those had been restricted to three months, but the U.S. Health and Human Services Department in August announced a new rule allowing short-term plans to last up to a year with the possibility of renewals for up for 36 months.
Short-term plans, which had been meant for people who are between health insurance policies or between jobs, aren’t subject to the same coverage requirements as other plans. For that reason, they’re also viewed as a conduit to affordability: Health and Human Services Secretary Alex Azar has said short-duration plans “aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
In anticipation of the federal shift on both association and short-term plans, the Vermont Legislature passed H.892, which became Act 131 when the governor signed it in May. That statute authorizes state rule-making on both types of plans and also says short-term plans cannot last more than three months and cannot be renewed.
Pieciak said those time limitations are good, but the state now needs to go further in its regulation of short-term health plans.
“When we take a look at what these plans usually are, the majority of them … don’t cover very important benefits like maternity care and prescription drug coverage – 71 percent of them don’t cover that,” Pieciak said. Coverage for substance abuse and mental health services also is lacking, he added.
In response, “we are anticipating filing rules that will require even these short-term, limited-duration plans to abide by the 10 essential health benefits and also to cover pre-existing conditions,” Pieciak said. “We’re planning to do that in the next few weeks.”
The new state rules governing short-term coverage will be finalized within three or four months. Pieciak said he doesn’t see a need to pursue quicker regulation.
“We don’t have any of these plans registered in Vermont yet,” he said. “But we’re doing this because there is anticipation that, due to a very public rollout of this new type of plan, and it being marketed now by various brokers and whatnot, there will be an interest.”
As was the case with the state’s regulation of association health plans, requiring short-term plans to provide comprehensive coverage likely undercuts much of the potential cost advantage. That’s a problem for proponents of such plans, who say they are badly needed.
“In Vermont, insurance has become too expensive for low- to middle-income families and younger, relatively healthier Vermonters to afford,” said Meg Hansen, executive director of Vermonters for Health Care Freedom, a free market reform group.
Hansen maintains that the Trump administration’s expansion of short-term plans “corrects a major inequity in the Affordable Care Act’s design by extending more choice, flexibility and affordability in health coverage to Americans without employer- or government-issued coverage.”
Short-term plans “in fact allow many individuals to actually afford health insurance, which may well consist of catastrophic coverage alone,” she added. “Why then would Vermont officials deprive us of that important opportunity?”
Pieciak doesn’t see it that way. He argues that “there’s some disinformation when you think of (short-term plans) as just being a cheaper option. It’s a cheaper option with a potential negative outcome.”
He also said some Vermonters may not realize that they can afford standard health care coverage. “A large number of people qualify for subsidies that make coverage considerably more affordable,” Pieciak said.
Vermont’s efforts to further regulate short-term plans likely will end up being more effective than U.S. Senate Democrats were. Last week, Democrats staged a last-ditch, unsuccessful attempt to block the Trump administration’s expansion of such plans.
U.S. Sen. Patrick Leahy, D-Vt., railed against what he and other Democrats called Trump’s “junk insurance” rules.
“We should be working together on ways to stabilize the insurance market and lower prices, instead of sabotaging health insurance protections that millions of Americans need and want,” Leahy said.
