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Court Rules in Favor of Limited Coverage Plans

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Malka Berro

Policy Associate

Court Rules in Favor of Limited Coverage Plans

August 1, 2019 | ACA | Comments
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Late last month, a federal judge upheld a Trump Administration regulation to allow the sale of bare-bones, short-term health plans that are exempt from critical health coverage provisions in the Affordable Care Act (ACA). The 2018 regulation, which went into effect in August that year, promotes the sale and allows for an extended duration of these short-term plans. These plans will continue to be sold in direct competition with ACA-compliant marketplace plans.

CONCERNS WITH LIMITED COVERAGE PLANS

Short-term plans are exempt from (and often do not offer) many important provisions comprehensive coverage provides, including:

  • Mental health and substance use disorder treatment
  • Behavioral health parity, ensuring behavioral benefits are offered at the same rate as medical/surgical benefits
  • Protections for individuals with pre-existing conditions

Under the Obama Administration, short-term health plans were limited to a three-month duration. With the recently upheld final rule, short-term plans would be extended to a full one year duration, with an option to renew coverage for up to three years. The National Council strongly opposes limited coverage plans that would significantly reduce access to comprehensive behavioral health coverage and expose patients to financial risk.

The federal court, and Judge Richard Leon in particular, acknowledged in the ruling that short-term plans will serve as direct competition for ACA-compliant plans. With primarily young and healthy people expected to switch to such plans, this decision could lead to higher premiums for individuals who need more comprehensive and robust coverage options. Individuals with chronic illnesses like mental illness and addiction could be at risk of great financial strain.

A report from the National Council, Families USA, Mental Health America, and the National Alliance on Mental Illness found that “in these [limited coverage] policies, having ever been diagnosed with a mental health condition or having received mental health or substance use treatment… would lead to limitations on or outright exclusions of services.”

NEXT STEPS

While there are reported plans to appeal this federal decision, states are directly addressing changes to short-term health plans by adding their own limitations, with 10 states banning or greatly restricting such plans altogether. California, New York, Massachusetts and New Jersey have banned these plans outright while Washington, Oregon, Delaware, Maryland and Vermont have made the offerings so unfavorable plans no longer offer these plans as an option for consumers.

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