The Hidden Pitfalls of Trump’s Promoted “Cheap” Health Insurance Plans

Several states have prohibited “short-term” insurance policies with limited coverage, while consumer advocates continue to highlight their risks.

Robert Hays, a sales manager from Arkansas, thought he had secured standard health insurance, as did 67-year-old retired cafeteria worker Essie Nath from Wyoming, and 47-year-old chef Martin Liz from Key West. All three enrolled in private health plans promoted by officials in the Trump administration as alternatives to Obamacare policies.

The stark difference between these plans and traditional health coverage became evident when each of them required surgery. Hays now faces $116,000 in bills for neck surgery after injuring his neck while lifting weights. Nath was diagnosed with heart failure and faces an $82,000 bill, while Liz is burdened with over $100,000 in bills for knee replacement surgery.

“These policies are a terrible idea,” said Ken Swindle, an attorney representing Hays. “People think they’re getting comprehensive health cover, but they’re not—and they often realise this too late.”

With enhanced government subsidies for Obamacare plans expiring this year, many Americans are likely to consider these “short-term” plans, lured by their cheaper premiums. However, unlike most insurance, short-term plans are not required to cover pre-existing conditions, maternity care, or even basic mental health services. Their limited coverage has led five states to ban them, according to the Kaiser Family Foundation (KFF), a nonpartisan health policy research group. Even major insurers have raised concerns, warning that consumers may mistake these plans for comprehensive coverage. The Biden administration has branded them as “junk” insurance.

Short-Term Insurance Plans: A Cheaper Option with Major Risks
Short-term plans are typically half the price of policies available through HealthCare.gov or state-run marketplaces. For instance, in Florida, a 40-year-old nonsmoker might pay around $500 per month for an ACA plan, but just $320 for a short-term policy. As more Americans face rising costs under Obamacare, millions are expected to consider these cheaper plans.

Insurance agents caution that although short-term plans might be suitable for healthy individuals between jobs or those temporarily ineligible for ACA subsidies, they are risky for most consumers. “I wouldn’t feel comfortable selling these plans,” said Andy Mided, a national health insurance consultant based in Chicago. “There are too many gaps in coverage.”

State Responses and Coverage Gaps
Five states, including California and New York, have banned short-term plans, while another nine have implemented restrictive regulations that effectively prevent them. In 36 states, however, they remain available. Notably, nearly half of these plans do not cover outpatient prescription drugs, and 40% exclude mental health services, both of which are mandated by ACA-compliant plans.

Some insurance agents defend short-term policies for individuals who are healthy, only need temporary cover, or cannot afford more expensive plans. “For certain people, they can be a useful option,” said Joshua Brooker, an insurance consultant in Pennsylvania.

Trump Administration’s Expansion of Short-Term Plans
In 2018, the Trump administration expanded the duration of short-term plans, allowing them to last up to three years instead of just four months. While critics like Cigna voiced concerns over the expansion, UnitedHealth Group supported the policy change, calling it a more affordable option for millions left out by the ACA system.

However, for many, these cheaper plans have proven to be a trap. Hays, for example, was shocked when his insurer denied coverage for his neck surgery, despite prior authorisation. He later found out the company classified his condition as pre-existing, even though his doctor disputed that claim. Hays is now suing to recover his medical expenses.

Similarly, Essie Nath encountered problems with her heart failure treatment. After being denied a third short-term policy due to a pre-existing condition, Nath purchased a different type of plan from the same insurer. Yet, when she needed care for heart failure, her claim was refused due to pre-existing conditions. Nath ultimately settled the case.

For Martin Liz, a long-term customer of National Health Insurance, his knee replacement surgery was denied after his insurer accused him of fraud or misrepresentation, despite prior approvals. Liz now faces over $100,000 in unpaid bills.

Conclusion
Short-term health insurance plans may appear attractive due to their low premiums, but their gaps in coverage can leave consumers with crippling medical debts. As millions of Americans search for more affordable options amidst rising insurance premiums, consumer protection advocates warn that these plans could do more harm than good. Before enrolling in a short-term plan, it is crucial for consumers to fully understand the potential limitations and risks involved.

Key Differences in Coverage: Short-Term vs ACA Plans