Alex Azar's poison pitch to the unsubsidized uninsured

Charles Gaba is out with a magisterial take-down of HHS Secretary Alex Azar's op-ed touting the Trump administration's promotion of  medically underwritten 'short-term" health plans (now with terms of up to 364 days, renewable twice) as a solution for those who have been priced out of the ACA marketplace.

Gaba points out that in decrying the high cost of ACA-compliant plans for the unsubsidized, Azar ignores:

• The extent to which various forms of Trump administration sabotage have driven the huge premium increases of the past two years.
• The premium growth trend in the pre-ACA individual market.
• The average actuarial value of pre-ACA plans compared to ACA-compliant plans.
• The likely impact of a barely-regulated short-term market on the ACA risk pool.
• The gross inadequacies of short-term plans now on the market.

I want to focus on two other major sleights of hand Azar indulges in. The first concerns the target market potentially served by short-term plans, and the second, the source of their affordability.

Psst, red states, want to destroy your ACA-compliant market? Set strict standards for short-term plans

Most discussion of the Trump administration's finalized rule allowing short-term health plans to be sold for a term of up to one year and renewed for up to three years spotlights not only the likely damage to risk pools in the ACA-compliant market, but also the dangers to enrollees posed by far-from-comprehensive insurance.

The Kaiser Family Foundation, for example, analyzed current short-term offerings available in 45 states. The report emphasized the impact of medical underwriting, exclusions for pre-existing conditions, medical loss ratios averaging 67% (and 50% for the two largest carriers) -- and the holes in coverage:

Of the short-term products offered on eHealth and/or Agile Health Insurance across all states, 43% do not cover mental health services, 62% do not cover services for substance abuse treatment (both alcohol and other drugs), 71% do not cover outpatient prescription drugs, and no plans cover maternity care. In seven states, none of these four benefit categories are covered in the short-term policies offered.

The plans on offer on eHealth.com do look pretty bad. I looked at one that does provide "prescription drug coverage" -- with a relatively low deductible of $1000 -- but with this caveat:

Covered after plan deductible when prescribed on an inpatient basis for a covered Injury or Sickness. Outpatient not covered; discount only.

As for the hospital where you have to get that covered drug prescription: benefits are capped at $1000/day.

When reading about such Swiss-cheese coverage, I've wondered: what if the federal government or a state required these medically underwritten plans to meet ACA standards, or something close to them? -- e.g., cover Essential Health Benefits, offer actuarial value of at least 60%, perhaps meet a minimum MLR of, say 75%? Or: what if insurers decided to take advantage of a new market opportunity and offer ACA-comparable plans in the noncompliant market?  Suppose they offered EHBs and a relatively high actuarial value, but with a yearly benefit cap?

I suspect that the public policy impact might be worse than under current rules, which allow plans to exclude pretty much whatever they want.