The Trump administration is making good on the president's executive order to rollback Obama-era restrictions on short-term health plans. Insurers will be able to start selling short-term coverage that's cheaper and less comprehensive than Obamacare plans — starting in October, when open enrollment for 2019 exchange coverage is set to begin. "We don't expect there to be significant migration away from the exchange by individuals who might otherwise purchase those policies," said Jim Parker, senior advisor on health reform to Health and Human Services Secretary Alex Azar. "We do believe … that there'll be significant interest in these policies from individuals who today are not in the exchange and in many cases have been priced out of coverage," Parker said.

'Short-term' for up to 3 years

The administration in February proposed allowing insurers to issue short-term plans with durations of up to 12 months. Now, carriers will be able to make those plans renewable for 36 months under the final rule issued by the Department of Health and Human Services, the Treasury and Labor Departments. Health officials say they based the new rules on regulations that allow workers to continue to pay into their employer plan coverage when they lose their jobs. "The analogy is made to COBRA coverage, which is also temporary coverage, but can be extended out in some circumstances out to 36 months," although insurers will not be required to renew plans, said Randy Pate, senior official at the Centers for Medicare and Medicaid Services. "You could still see short-term plans on the market that are up to 12 months that are not renewable."

Exempt from Obamacare rules and protections

Short-term plans are exempt from coverage mandates under the Affordable Care Act. Not having to cover those required benefits such as free preventive care, or coverage for pregnancy and mental health, allows insurers to bring down premium costs substantially. The plans are exempt from ACA protection limits on out-of-pocket expenses, set dollar limits for coverage, and can reject consumers due to pre-existing conditions. "There's so little regulation of these products. It's a buyer beware situation" said Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University. "Some of them are truly junk insurance." The administration says insurers will be required to provide clear notice to consumers that short-term plans do not offer Obamacare protections, and clearly outline what the plans cover. "These policies are different from those offered on the exchange. We make no representation that it's equivalent coverage," Parker said. Clearing the way for sale of the plans to begin during this year's open enrollment could make for direct competition for Obamacare plans, although health officials say some states may impose their own regulations that could delay the actual plan offerings.

Wide-ranging estimates on demand