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New Insurance May Not Cover What You Think It Does


OK, if you're looking for a cheaper health insurance than you can currently find on the individual market, a whole host of new options will become available starting tomorrow. This is due to a change the Trump administration is making to insurance regulations. But buyer beware - with lower prices come fewer benefits. Here's NPR's Alison Kodjak.

ALISON KODJAK, BYLINE: They're known as short-term limited duration health plans. And the idea is to give people who think Affordable Care Act policies are too expensive or don't think they're worth it a different option.

DOUG BADGER: These are a niche product, always have been.

KODJAK: That's Doug Badger, a visiting fellow at the conservative Heritage Foundation in Washington.

BADGER: It's simply another choice for consumers that for many is more affordable than the other products available on the individual marketplace.

KODJAK: Short-term health insurance isn't new. It served for many years as stopgap coverage for people who are, say, between jobs or just out of college. But during the Obama administration, the plans were limited to just 90 days. Now the Trump administration is expanding access so that people who don't want to pay for insurance that meets Affordable Care Act standards or who don't qualify for subsidies can find coverage. More than 80 percent of people who buy insurance on the ACA exchanges get subsidies to help pay for it, but there's no government help for short-term plans. The new rules allow people to buy a policy that lasts a year. And they can renew two times, which Badger says is a good option.

BADGER: Instead of remaining uninsured to have a product that makes sense for them.

KODJAK: But Allison Hoffman with the University of Pennsylvania Law School says this insurance may have a role, but it comes with a risk.

ALLISON HOFFMAN: People who think that they're healthy, they're unlikely to need - to use much medical care, they may still want a backstop. They may want something. And they may buy these plans thinking that they're going to get them what they want. And for some people, that could be true. And for others, when they actually go to use medical care or if they get sick or if they're in an accident, they'll find that they don't really have very much health insurance coverage.

KODJAK: That's because these short-term term policies don't have to meet the Affordable Care Act rules. They don't have to cover people with ongoing health problems and usually cover fewer services than required under the ACA. Policies may cost as little as $75 a month, but they often carry big deductibles - more than $10,000 on some. And they may not cover things like prescriptions or mental health care. And generally, they only pay about half of any medical bill after that deductible is met.

HOFFMAN: So people have something called health insurance, but it doesn't necessarily pay for all of their health needs.

KODJAK: These policies are regulated at the state level and some states have banned them altogether, so your options will look different depending on where you live. And the new rules say insurance companies have to be very clear about what the policies cover and what they leave out. The government estimates about 600,000 people may buy short-term insurance next year. And after five years, that market could grow to about 1.2 million people. Alison Kodjak, NPR News.

(SOUNDBITE OF BROKE FOR FREE'S "CRUMBS") Transcript provided by NPR, Copyright NPR.

Alison Fitzgerald Kodjak is a health policy correspondent on NPR's Science Desk.
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