After failing to repeal Obamacare, the Trump administration is making a move to empower states to expand short-term health care coverage.  From a states' rights point of view, this is a good thing, but is it the right move for consumers and taxpayers for state commissioners to expand short-term, limited-duration (STLD) health insurance plans?

Conservatives are hailing a proposal by the Trump administration to give state commissioners the power to expand the length of STLD health insurance plans.  However, an independent study by Medicare's chief actuary, Paul Spitalnic, challenges that the hidden costs of STLD plans could raise health insurance prices and increase subsidies paid by the federal government. 

The administration's proposal to allow states to expand STLD health plans comes after Congress's failed attempt last year to repeal the Affordable Health Act (ACA), commonly known as Obamacare.  In a different action, Congress did successfully reduce to zero the tax penalty on individuals who fail to secure health insurance.  The administration's move is seen by many as the next step in its continued effort to dismantle Obamacare.  The question is whether consumers and taxpayers are ready to foot the bill for Congress's failure to implement a workable system in its place.

Proponents vaguely describe the STLD benefits to consumers, but who are the consumers?  There is no distinct homogeneous group.  The market reality is that STDL consumers are healthy.  Allowing that population to create its own marketplace will result in the majority of consumers in the ACA market seeing higher premiums and have fewer choices as a result of STLD expansion. 

Short-term health insurance plans were created through the ACA to provide stopgap health coverage for individuals during an unexpected short-term loss of health insurance such as a job loss.  Currently, an STLD plan lasts up to three months before requiring subscribers to transfer health coverage to a longer-term health care plan through an ACA exchange.  The administration's proposed rule would allow states to expand short-term plans to provide health coverage up to 12 months with the possibility of subscriber renewal.

The cost of ACA coverage to consumers and the federal government has been a point of contention for critics since its inception.  Today, the Trump administration and Spitalnic are at odds over the actual financial cost to consumers and the federal government.  The heart of the debate is the uncertainty in the number of consumers who will leave their current ACA plans for STLD options.  The administration estimates that a few hundred thousand people might sign up for short-term policies, but Medicare's report warns that an estimated 1.4 million or more people could seek this option in the first year alone.

What is more concerning is the discrepancies in actual cost between the Trump administration and the Medicare report.  The White House estimates the financial loss to the federal government to be between $96 and $168 million a year.  In his analysis, Spitalnic reports that federal spending would actually increase by $1.2 billion next year and by a total of $38 billion over ten years. 

The appeal of an STLD plan to some consumers is clear.  STLD plans provide consumers health insurance coverage at a significantly lower cost than ACA-compliant plans.  However, the lower prices also mean less health care coverage for consumers, which could end up costing consumers vastly more in out-of-pocket expenses.  Current STLD regulations don't require short-term plans to sell to individuals with pre-existing conditions, and they can exclude prescription drugs, maternity care, mental health coverage, and other preventive services.  In other words, STLD health care coverage is for the healthy.

STLD low-cost plans are already popular with younger, healthier Americans.  A January Modern Healthcare magazine article reported that during 2017, 60% of individuals purchasing short-term plans were between the ages of 18 and 34. 

In today's health care market, the cost difference between an ACA-complaint plan and a short-term limited duration plan is significant enough for families to take a risk in being without coverage during a major medical health crisis.  Spitlanic believes that the exodus of people leaving ACA plans leaves a population of less healthy individuals in the ACA health care market.  The result is an increase in health insurance costs to cover the larger pool of fewer healthy individuals. 

The Trump administration's former Health and Human Services secretary, Tom Price, recently shared his concern about repealing the individual mandate – a point that applies to STLD plans as well.  "There are many, and I'm one of them, who believe that [repealing the mandate] will harm the pool in the exchange market because you'll likely have individuals who are younger and healthier not participating in the market, and consequently that drives up the cost for the other folks within that market." 

Currently, the federal government provides subsidies to people who purchase premiums in the ACA marketplace.  A reduction of healthy members and increase of fewer healthy participants will increase those federal subsidy payouts.  The financial burden will fall to middle-income individuals and families, not eligible for federal subsidies, who will see their premium plans increase. 

For example, experts predict that STLD expansion will create an 18-percent increase in premiums for the general health insurance market.  An AARP Public Policy Institute study estimates that a 60-year-old individual could see as much as a $4,000 increase in annual premiums. 

As the debate continues over the actual cost of STLD expansion to the federal government, the real question for Americans to ask is whether expanding STLD is the best choice in providing affordable health care.  How much ownership are state insurance commissioners willing to take of Congress's failures when rates skyrocket in their states?

Dana C. Stewart is a former U.S. Senate staffer and a freelance writer.