The Potential Impact of Short-Term Limited-Duration Policies on Insurance Coverage, Premiums, and Federal Spending

Source: Linda J. Blumberg, Matthew Buettgens, Robin Wang, Urban Institute, Research Report, February 2018

From the abstract:
On February 20, 2018, the Departments of Treasury, Labor, and Health and Human Services released a proposed regulation that would increase the maximum length of short-term, limited-duration insurance policies to one year. These plans, sold to individuals and families, are not federally required to comply with the Affordable Care Act regulations that prohibit annual and lifetime benefit limits, require coverage of all essential health benefits, and otherwise prohibit insurers from setting premiums or choosing whether to sell coverage to particular people based on applicants’ health status and health history. As such, these plans do not meet minimum essential coverage standards under the law; thus, the Congressional Budget Office does not consider them private insurance. If implemented, the rule would permit these plans to compete against the ACA-compliant plans.

Importantly, this change would be implemented on top of an array of other significant policy changes made since the beginning of 2017. We analyze the implications of the 2017 policy changes relative to the ACA as originally designed and implemented, in addition to the potential consequences of the proposed expansion to short-term limited-duration policies. In estimating the effects of these changes on insurance coverage, premiums, and federal spending, we take into account the variations in state circumstances and state-specific laws on short-term plans.

This brief was updated February 26, 2018. The title and notes for table 4 were altered to remove references to current law that had been inadvertently copied from tables 1–3.