The plans don't have to comply with Affordable Care Act rules including: coverage of essential benefits; prohibition against medical underwriting; limits on premium variations based on age, sex or health status; elimination of annual and lifetime benefit caps; annual limits on out-of-pocket costs; and the requirement that plans spend no more than 20% of premiums on administrative costs and profit.
In the lawsuit, the cities cite both the President's open promises to let Obamacare "implode" as well as his administration's actions to make that happen -from the termination of enrollment partnerships with hundreds of local and national groups, to abruptly ending subsidies to insurers, to scuttling efforts by Congress to pass a market stabilization bill, to the evisceration of the budget for outreach and in-person assisters.
In a press release, U.S. Health and Human Services Secretary Alex Azar says, "These plans aren't for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system".
As younger, healthier people opt out of ACA markets, premiums will rise for people buying ACA-regulated plans. These plans won't have to cover as many medical services and are exempt from covering people with pre-existing conditions.
"There's a clear case of premeditated destruction of the Affordable Care Act", NBC quoted Columbus city attorney Zach Klein. Other insurers were more neutral, and companies marketing the plans hailed the development.
Some in the industry say they're developing "next generation" short-term plans that will be more responsive to consumer needs, with pros and cons clearly spelled out.
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The administration estimates that premiums for a short-term plan could be about one-third the cost of comprehensive coverage. There is a relatively small risk to the insurance company on what they would pay out relative to those plans'.
Nonetheless, the CEO of a company that offers short-term plans says they're a "rational decision" for some people.
Smedsrud said most plans restrict coverage for those who have sought treatment for a pre-existing condition over the past five years.
Schumer said Democrats will introduce a resolution to rescind the rule using the Congressional Review Act, which allows Congress to revoke an administration regulation with a simple majority any time up to 60 legislative days after it is published in the Federal Register. The administration says it expects about 1.6 million people to pick a short-term plan when the plans are fully phased in.
However, these plans also don't have to adhere to all of Obamacare's rules, particularly the one requiring insurers to offer comprehensive coverage.
But a recent Kaiser Foundation analysis found turmoil in the unsubsidized market.