Short-Term Health Insurance Plans Charge Less than Half as Much in Premiums as ACA Plans By Excluding Pre-Existing Conditions and Severely Limiting Benefits

Short-term health insurance plans offer a trade-off for consumers: substantially lower premiums than plans that comply with the Affordable Care Act, but much less protection if they get sick and need care.

Just how much cheaper are the premiums and what are consumers giving up to get them? A new KFF (Kaiser Family Foundation) analysis finds short-term plans are able to charge premiums 54 percent lower than ACA-compliant plans, by excluding pre-existing conditions and severely limiting benefits. Specifically, it finds:

• Plans achieve 38 percent lower premiums by simply denying insurance altogether to people with pre-existing conditions, or refusing to cover such conditions for those offered a policy.
• A further 16 percent reduction relative to ACA-compliant plans arises from short-term plans’ exclusion of, or severe restrictions on, potentially costly benefits such as coverage for prescription drugs, maternity care and mental health and substance abuse treatment.

The Trump administration has expanded the availability of such plans, which can offer coverage for up to 364 days and do not have to comply with the ACA’s rules. The lower premiums will likely lure healthy people away from ACA-compliant plans, especially consumers with incomes too high to qualify for ACA premium subsidies.  As a result, ACA-compliant plans will be left with a sicker pool of enrollees and higher premiums.