Trump previewed the move in October, when he signed an executive order allowing the development of such plans.
The Trump administration finds itself in an awkward situation as it touts its business-friendly tax legislation at the same time hundreds of companies face fines for violating Obamacare's employer mandate, even though the president has done nearly everything in his power to abolish the federal health care law, Politico reported on Wednesday.
Officials in some states that have aggressively implemented the Affordable Care Act, such as California, have expressed opposition to short-term plans, warning they would put insurance markets at risk.
"The expansion of short-term health insurance plans is part of a strategy to create a parallel insurance market that does not comply with the ACA's rules", Larry Levitt, senior vice president of the Kaiser Family Foundation, said on Twitter.
Health and Human Services Secretary Alex Azar said Tuesday that his agency and the Department of the Treasury are proposing to renew and expand such plans as an option for Americans. Insurers could charge more if a consumer's medical history discloses health problems.
Azar said the plans would be attractive to individuals transitioning between policies, students taking a semester off from school, or individuals in rural areas or counties where they only have one insurance carrier to choose from.
Critics predicted the change would increase premiums in the individual market by siphoning off healthier customers and argued it could prompt insurance companies that offer more comprehensive plans to leave traditional insurance markets. For example, they set annual and lifetime caps on benefits, and few cover prescription drugs.
"The end result will be higher premiums and fewer plan choices for people with health care needs, as well as for healthy people who want the kind of benefits and financial protection that real insurance is supposed to provide", Sabrina Corlette, research professor at Georgetown University's Center on Health Insurance Reforms, told HuffPost. The plans are only cheaper because they skirt federal consumer protections.
"The Trump administration should stop hurting people with pre-existing conditions, stop pushing skimpy plans, and stop raising costs up for millions of Americans".
Democratic leaders agreed. This "plan is a green light to discriminate against Americans with pre-existing conditions - and will make quality health insurance more expensive and less accessible", said Senator Ron Wyden, ranking member of the Senate Finance Committee.
Trump officials countered concerns that these plans could leave policyholders vulnerable by saying that they will provide more options to people, particularly the 28 million Americans who are now uninsured.
Insurers also aren't required to guarantee the renewal of short-term plans, although CMS is requesting comments about what how to best incorporate renewability options. And by HHS' own estimate, taxpayers will take a hit as well, as the ACA's tax credits will have to increase for millions of people in the individual market as premiums rise.
"The status quo is failing too many Americans, who face skyrocketing costs and fewer and fewer choices", he said in a statement.
Short-term plans have continued to be available since the ACA was passed.
Joe Antos, a health-care expert at the right-leaning American Enterprise Institute, said he thought the number of people enrolling in the ObamaCare marketplaces would remain steady. This would've meant buyers would be responsible to paying the penalty for violating the ACA's individual mandate, but that penalty won't exist after this year thanks to a provision in the tax cut legislation passed late in 2017.
Another major change since 2016 is the repeal of ObamaCare's mandate to have insurance, which Republicans did away with in December.