Iowa allows 5 insurers to sell short-term plans in 2020 — What hospitals should know

The Iowa Insurance Division gave approval to five insurers to sell short-term health plans in 2020, and is working with several others to get their plans approved, the state agency said Jan. 6.

The Trump administration loosened regulations on short-term health plans in late 2018, arguing the plans increase Americans' health insurance options — especially for those facing high premiums and fewer selections on the ACA individual market.

Under the new regulation, short-term plans can now last a year, much longer than the original 90 days. They can also be renewed for up to three years. 

Iowa said the short-term plans are compliant with state benefit regulations, which include a base set of benefits, out-of-pocket maximums and a minimum level of coverage. At the federal level, the plans don't have to comply with many of the ACA's consumer protection rules, such as not discriminating against members based on preexisting conditions. In early 2019, the Los Angeles Times said that short-term health plans were bringing back familiar stories of patients being denied coverage because of preexisting conditions.

If consumers aren't aware that short-term plans in general aren't mandated to cover essential benefits under the ACA like mental health claims and maternity care, they could be stuck with large, possibly unaffordable out-of-pocket costs after getting treatment. Hospitals, as a result, could see their uncompensated care costs grow. An increase in uncompensated care costs takes a toll on a hospital's overall financial strength. 

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