By Dania Palanker, Kevin Lucia, JoAnn Volk, and Rachel Scwhab
California has made dramatic progress in expanding insurance coverage through the implementation of the Affordable Care Act (ACA). But the expansion of short-term, limited-duration insurance could put California’s consumers — and the stability of its individual health insurance market — at risk. If short-term plans siphon healthy people out of the individual market, including Covered California, consumers looking for comprehensive coverage may find themselves facing significantly higher premiums and fewer choices in the ACA-compliant market
To understand the short-term insurance market in California, we interviewed 21 stakeholders—including state officials, brokers and agents, insurers, and experts on California insurance markets—in addition to conducting a market analysis and review of state and federal statutes and regulations. The short-term market is currently small in California, but that could change and enrollment in short-term plans could contribute to destabilizing the individual health insurance market and increasing premiums. Policymakers have options to limit the growth of the short-term market in California and mitigate the potential harm to consumers.