Practical Short-Term Health Coverage Unlikely Unless Legislature Acts

Over the past two months, a federal rule change has allowed insurance companies in Michigan to offer short-term policies that extend up to 364 days, instead of the previous three- month ceiling imposed by the Obama administration. And legislation that’s currently pending in the Michigan Senate would change state law to accommodate the change.

Senate Bill 1224, introduced on Nov. 28 by Sen. Peter MacGregor, R-Rockford, would allow insurance providers in Michigan to provide renewable short-term health insurance plans that are good for up to 365 days. Currently, a short-term health insurance plan in Michigan can only be issued for periods of less than six months, and it is not renewable.

MacGregor’s bill would allow short-term policies to exclude pre-existing conditions, but would not require them to do so.

Tami Hibbits, vice president of individual markets at Priority Health, said that her company supports the bill because it would help address the reasons an individual would go without health insurance.

“Short-term plans address two of the most often cited reasons that people go uninsured — cost and job changes,” said Hibbitts. “These plans are a good solution to help consumers bridge gaps in health care coverage due to a job change or loss, or some other situation that makes them ineligible to receive subsidies which can make an ACA plan unaffordable.” ACA, short for the Affordable Care Act, is the more formal name for Obamacare.

Short-term health insurance plans typically cover fewer services but are also much less expensive than a standard individual healthcare policies sold through the Obamacare exchanges. Unlike exchange-based policies, short-term policies are priced on an individual’s risk factors, a process called underwriting.

Supporters of the legislative proposal view short-term health care plans as an option for someone who is healthy, in between jobs or doesn’t have traditional health coverage, which is often offered through an employer.

Supporters also say that short-term health insurance would be an alternative for some in the state who would otherwise go without health insurance. In 2019, the federal government will no longer impose a tax on individuals who don’t have a minimum amount of health insurance, which had been imposed by the ACA.

Charles Gaba, a progressive health care data analyst and blogger, said he opposes SB 1224 because, among other reasons, short-term health insurance does not have to offer all the benefits mandated by the ACA.

“I oppose expanding the availability of short-term plans since they’re allowed to deny coverage of pre-existing conditions as well as many of the ACA’s mandated benefits such as prescription drugs; are allowed to impose annual or lifetime limits on coverage; have no limits on out-of-pocket costs for enrollees; and weaken the individual market risk pool, which causes premiums to increase,” Gaba said in an email.

In October, Democrats in the U.S. Senate voted to reverse the Trump administration rule, but failed in a 50-50 vote, with Republican Susan Collins joining all Democrats in support.

Charles Owens, the Michigan state director of the National Federation of Independent Businesses, said he believes SB 1224 and other short-term health policies would be beneficial for Michigan’s small businesses.

“It is unfortunate that opponents of legislation to align Michigan’s rules with new federal changes believe that it is better for someone to go without health care coverage than have some basic coverage,” Owens said in an email. “These short-term policies may be the only health insurance many small business owners can afford. It’s like they are saying if you can’t afford a Cadillac, then you are not allowed to buy a more economical car and you can just walk.”

Since the passage of the Affordable Care Act in 2010, health insurance premiums have steadily increased, as have deductibles. According to Priority Health, in 2010, a 40-year-old would pay about $100 per month for health coverage. Now, the company says, that same person would have to pay almost $450 for a similar plan.

Blue Cross Blue Shield declined multiple email and phone call requests for comment.

Senate Bill 1224 is currently before the Michigan Competitiveness Committee. Ari Adler, a spokesman for Gov. Rick Snyder, said the governor has not taken a position on the issue. Gov.-elect Gretchen Whitmer’s transition team did not respond to an email requesting comment on the bill.