The Perfect Storm: Misleading Marketing of Limited Benefit Products Continues as Millions Losing Medicaid Search for New Coverage

By Rachel Schwab and JoAnn Volk

A massive coverage transition is underway for millions of people who have relied on Medicaid throughout the COVID-19 pandemic. After a three-year pause, states have begun disenrolling residents from Medicaid, a critical safety net program for people with low incomes that provides health insurance to some of the most underserved Americans. This process will leave many of these individuals in need of new coverage that meets their health care needs.

A secret shopper study conducted by researchers at Georgetown University in June 2023 suggests that people losing Medicaid who are eligible for high-quality, affordable coverage through the Affordable Care Act (ACA) marketplace are facing aggressive marketing of limited benefit products. Despite the availability of subsidized marketplace plans, misleading sales tactics put millions of former Medicaid enrollees at risk of purchasing policies that expose them to catastrophic health care costs, or forgoing coverage altogether.

The study found:

  • Online searches for health insurance led to websites and solicitations from sales representatives promoting limited benefit products, rather than the ACA marketplace.
  • A researcher spoke to 20 sales representatives using two profiles of consumers losing Medicaid who are eligible for a $0 premium plan with no deductible on the ACA marketplace.
    • None of the 20 representatives mentioned the availability of a $0 marketplace plan with no deductible.
    • Over half of representatives tried to sell the consumers limited benefit products.
    • Representatives frequently made false or misleading statements that concealed the restrictions of limited benefit products or misrepresented the availability or affordability of marketplace plans. Most representatives selling limited benefit products also refused to provide written plan information.
    • Many representatives, particularly those selling limited benefit products, used aggressive sales tactics, such as pressuring consumers to commit to a plan over the phone or suggesting that plans would become unavailable or more expensive if they took additional time to look at their options or budget.

You can read the full report here.

CHIR thanks The Leukemia & Lymphoma Society for their generous support of this study.

Financial Interest Disclosure: Rachel Schwab serves as a Senior Research Associate in the Center on Health Insurance Reforms at Georgetown University. She has also served as a consultant for The Leukemia & Lymphoma Society, Inc.

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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.