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Trump Administration extends maximum length of short-term health insurance plans to 3 years

The Trump Administration has finalized new rules changing the maximum length of short-term, limited duration health plans, a step it claims will increase health insurance options for Americans. 

Issued by the US Departments of Health and Human Services (HHS), Labor and Treasury, the new guidelines extend the previous initial maximum cover period from three months to 12 months, with an option to extend the coverage duration to a maximum of three years. This largely reverses a rule published by the Obama Administration in 2016, with the new plans expected to be between 50 and 80 percent less expensive than those covered by the Affordable Care Act (2010), also known as Obamacare. 

An estimated 28 million Americans are currently without insurance coverage, according to figures from the Centers for Disease Control and Prevention. A statement issued by the White House claimed many Americans are priced out of Obamacare plans, with insurance premiums rising by more than 100 percent in the five years after it was rolled out. 

“This new rule will increase choices for Americans facing extremely high premiums and create flexible options that are not currently available to individuals,” it asserted. 

Under the new rules, plans can be combined with separate commercial products that provide people with financial protection from possible increases to their premiums if they are taken ill. However, the new rule does not modify any of the legislation governing current Obamacare plans, but rather it will provide consumers with another health insurance option, the White House clarified. 

HHS secretary Alex Azar told Squawk Box the finalized rule offered a “really important option for millions of Americans who have been forgotten or left behind by Obamacare”. However, critics of the rule warned it does not deal with many of the problems associated with short-term insurance and lack of cover in the US. 

The American Diabetes Association (ADA) said it was “dismayed” at the rule and the Administration’s decision to “further dismantle rather than stabilize the health insurance marketplace”. The organization warned it could eventually cost millions of Americans their cover and potentially even their health. 

“Allowing short-term plans to proliferate offers no relief from the problems that plague our health care system, and instead will exacerbate the affordability concerns for unsubsidized individuals even as many states are implementing reinsurance programs to lower costs,” the ADA stated. 

It warned the rule will take healthier and younger people out of the individual market risk pool, which would lead to higher costs and premiums for patients with preexisting health conditions. Furthermore, the ADA suggested young and healthy people with insurance may find they are left with a health plan that will not cover critically necessary care if they fall ill or develop a serious medical condition.