Short-Term Insurance Limit is a Win for Ill. Small Businesses

When Illinois lawmakers overrode Gov. Bruce Rauner’s veto of a bill intended to place restrictions on short-term health insurance plans sold in Illinois they protected healthcare access for the state’s entrepreneurs. Limiting these plans to a maximum duration of six months was a necessary step in light of the Trump administration’s recent decision to allow short-term insurance plans to last up to 364 days, a change that is bad for Illinois’ small firms that depend on the Affordable Care Act (ACA) marketplaces for quality, affordable insurance.

Short-term health insurance is meant to fill a gap in an individual’s coverage in the instance of job loss or other life changes. These plans are inexpensive because they are not compliant with ACA requirements and not required to cover essential health benefits like prescription coverage or mental health treatment, and they can come with hefty deductibles. The Trump administration estimated as many as 1.6 million people will purchase short-term plans by 2022, and we expect many of them will be younger and/or healthier. This will create an unbalanced risk pool that disrupts the individual marketplaces and raises costs for everyone else who remains in those marketplaces.

If the administration’s prediction is accurate it would devastate small firms, including about 54,000 self-employed entrepreneurs and small business owners in Illinois who receive their health insurance through the state ACA marketplace. Without healthy people in the marketplace to offset the costs insurance companies incur to care for older or sicker people, premiums will rise drastically and many small businesses will be priced out of the market.

With so much damage being done in Washington to disrupt the healthcare marketplaces small businesses depend on, it’s critical that Illinois pursue policies that enable small business owners to access affordable, quality healthcare options. Fortunately, our state lawmakers did just that.

Geraldine Sanchez Aglipay is the Illinois Outreach Manager for Small Business Majority.