But the tricky thing about many short-term plans, relative to other offerings, is they may not even be that useful for young-and-invincible types. While it’s difficult to assess their average value, since they are unregulated and diverse, the cheapest short-term plans appear to do little but avert only the most extreme—and unlikely—costs.
For example, the cheapest short-term plan offered in Phoenix on the eHealth portal—a major private, online insurance marketplace—costs $30.59 a month for a 30-year-old male nonsmoker. Under the new Trump regulations, it would amount to about $367 per year. Not bad! That’s less per year than the 30-year-old might pay per month under some Obamacare plans on the exchange.
But he’d get what he pays for. Under that plan, he would pay $10,000 of his first $15,000 in medical expenses, after meeting his $5,000 deductible and covering 50 percent coinsurance payments (up to $5,000) after the deductible is met. Before he hits the $5,000 out-of-pocket maximum, the plan would pay $1,000 maximum per day for hospital stays, $1,000 maximum for outpatient surgery, and $500 maximum for emergency-room visits. The plan wouldn’t cover outpatient prescription drugs.
It gets more complicated from there. Let’s say Phoenix Man has his hit-by-a-bus moment and suffers a serious, but not deadly, injury like a complex and displaced arm fracture. Assuming he doesn’t have the wherewithal or pain tolerance to take a Lyft to the hospital, and decides to take an ambulance, the ride might set him back $1,000. If this is his first health incident since enrolling in the plan, that payment would come straight from his own checkbook, because his deductible hasn’t been met. While it only allows for some very rough assumptions, health-cost calculator site Amino says Phoenix Man can expect another $5,000 in facility fees. The costs of the actual medical procedure to fix his arm would be about $4,000, of which he’d pay half, since by then his coinsurance payments would kick in. Assuming things go well and there aren’t complications, Phoenix Man would pay around $7,500 for a $10,000 treatment.
Although this is just a guesstimate—and granted that high deductibles are common even in Obamacare plans—this scenario illustrates the gist of the value proposition of many short-term plans. Phoenix Man pays $367 a year for what is essentially a 25 percent discount on his accident. While the bang for his buck would increase if he got sick or—heaven forbid—walked in front of a bus again, unless he racked up enough bills to hit the out-of-pocket maximum, Phoenix Man would pay for half of all his subsequent medical costs for the rest of the year—except for his prescriptions, which would be full price.
That is, of course, better than being uninsured. But given that most Americans have less than $1,000 in savings and many can’t afford sudden major bills, having a short-term plan like Phoenix Man’s might not make that much of a financial difference overall. For low-income people with little to no margins on their monthly paychecks, it might make more sense to forgo the $30 monthly payments for a bare-bones plan and float by uninsured, taking extra care at busy crosswalks.