As Administration Reviews Comments on Short-Term Insurance Plans, Analysis Finds Gaps in Coverage

The Obama Administration is currently reviewing over 150 comments received in response to a proposed rule that would limit short-term health insurance policies. As noted in a previous blog post, the proposed regulations, if finalized, would make it less appealing for insurers and brokers to sell these short-term policies. This is because the polices would be limited to less than 3 months in duration and potential enrollees would see a clear disclaimer that they may still have to pay the tax penalty for failing to maintain coverage.

We have written before on the CHIR Blog (here and here) about short-term policies, noting that they do not need to comply with ACA protections. In a quick review of short-term insurance plans available for purchase from web brokers, we found that these plans regularly exclude care that is required of individual market plans under the ACA. All of the plans we reviewed exclude treatment of pre-existing conditions and routine maternity care – such as prenatal visits and childbirth. None of the plans provide preventive services without cost-sharing and some of the plans do not cover preventive services required by health insurance plans under the ACA – such as an annual gynecological exam for women or well-baby exams. Some of the other benefits required under the ACA that are excluded by some short-term polices are prescription drugs, mental health services, and substance abuse treatment.

In addition, plans have numerous other exclusions.  Some of the exclusions found in our review were:

  • Organ or tissue transplants
  • Services to treat pain disorders
  • Treatment of joints, bones, or connective tissues except in cases of a covered injury
  • Allergy therapies

With all of these exclusions, what do short-term polices plans actually cover? They clearly are not a replacement for comprehensive health insurance.

However, the comments submitted in response to the proposed regulation are a mix of support for the proposed protections and opposition to the proposed limits on short-term policies. Consumer advocacy organizations generally support the proposals, as does America’s Health Insurance Plans, while insurance companies selling such products and brokers generally oppose them. While numerous state insurance departments submitted comments opposing the proposed changes, the Washington State Office of Insurance Commissioner submitted comments strongly supporting the proposed restrictions on short-term policies. In addition, the DC Health Benefit Exchange Authority, which oversees the District of Columbia’s Health Insurance Marketplace, submitted a letter in support of the proposed changes, noting that Exchange staff has worked with consumers who believed they were enrolled in comprehensive coverage but actually had insufficient short-term coverage and missed open enrollment as a result.

Short-term plans screen for pre-existing conditions and exclude coverage for many chronic conditions, suggesting they are siphoning healthy customers away from ACA-compliant plans and resulting in adverse selection against the health insurance marketplaces. Not to mention duping people into buying coverage that doesn’t meet their needs. To improve the marketplace risk pools and better protect consumers, we hope the Administration does not bow to industry pressure and finalizes the regulations as proposed.

1 Comment

  • bob hertz says:

    This is somewhat of an ivory tower analysis. Say you are 62 years old and make $50,000 a year, which is too much for subsidies.
    After taxes your take home income is about $3500 a month.

    Your ACA premium even for a skinny silver plan might be $700 to $900 a month. Hello, that is about 20-25% of your income.

    Along comes short term insurance for $350 a month. You don’t have any chronic illnesses so you jump on it.

    This is a matter of economic survival!

    What you say about siphoning off healthy persons is true. But what I say about survival is in a way more true.

    The solution of course is to extend subsidies to all incomes. But until that happens, short term insurance can be a life preserver.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.