Users and sellers of short-term health insurance are trying to use a barrage of comment letters to keep federal agencies from putting a three-month limit on how long the coverage can last.
The "tri agencies" — the U.S. Department of Health and Human Services, the U.S. Labor Department and the U.S. Treasury Department — included that proposal in a packet of draft regulations released in June, along with a proposal to revamp the rules for insurance policies that cover specific diseases.
The Affordable Care Act requires issuers of individual major medical coverage to sell the products without considering applicants' health status, and to price the products without using any personal health information other than age, location and tobacco use. The law also requires the policies to provide unlimited annual and lifetime coverage for what regulators define as essential health benefits.
Any consumer can buy ACA-compliant individual major medical coverage during an annual open enrollment period, which lasts from Nov. 1 through Jan. 31. The rest of the year, consumers need to show they have a good excuse shop for coverage.
Regulators developed that enrollment time limit system to keep people from waiting until they get sick to pay for coverage.
Up till now, the ACA rules have not applied to short-term health insurance. Insurers that sell it can put applicants through a medical underwriting process. The issuers can exclude coverage for conditions such as a normal pregnancy, set benefits caps as low as they like, and sell the products all year round.
In some states, consumers have been able to get one short-term health insurance policy that stays in effect for as long as a year.
Who could object to that?
Comments are not due until Aug. 9, but the comments posted on Regulations.gov at press time were mostly highly critical of the proposal.
Twenty of the people who officially speak for consumers at the National Association of Insurance Commissioners have sent the agencies a group letter praising the proposed three-month coverage limit. The consumer reps talk about why they think the curb on short-term health benefits periods could protect consumers against bad insurance and shore up the stability of the individual major medical risk pool.
Consumers who simply know they like short-term health insurance have written to defend it.
Agents, brokers and benefits group officials have written to object to the three-month time limit proposal, describe the alternatives consumers might use in place of short-term health insurance, and suggest ways to improve the proposal.
For a look at some of what's in the comment letters, read on.
Letting the lowest-risk buyers escape from an insurance market can lead to a death spiral. (Image: Ekaterina Shvaygert/TS)
1. Consumer group reps
Timothy Jost and other reps have written to say that one of the main goals of the Affordable Care Act is to give consumers the ability to buy high-quality individual major medical coverage without worrying about medical underwriting.
Letting healthy consumers escape from the high-quality, guaranteed-issue major medical market, to buy medically underwritten coverage that may last nearly a year, could hurt the major medical market, the consumer reps write.
"It is not possible for insurers to offer affordable coverage to all, regardless of health status, if healthy people are not in the risk pool," the reps write.
The exit of low-risk buyers from an insurance risk pool can lead to a self-sustaining cycle of sales decreases and price increases.
In many cases, the reps write, short-term health insurance coverage may be weak, and consumers may not even understand what they are buying, or understand how the Affordable Care Act shared responsibility penalty on the uninsured works.
"Do purchasers always understand that they will still have to pay the individual responsibility penalty even though they purchase short-term or excepted benefit coverage and have no other coverage?" the reps ask.
For a look at how members of those groups are responding to the proposed three-month benefit limit, read on.
Ordinary consumers are writing to say short-term health insurance is the best coverage they can afford. (Photo: Thinkstock)
2. Individual short-term health insurance users
The government does offer rich Affordable Care Act subsidies for ACA exchange plan users with income under 250 percent of the poverty level, some subsidies for people with income from 250 percent to 400 percent of the poverty level, and no subsidies for people with income over 400 percent of the poverty level.
The income cutoffs are a little higher in Alaska and Hawaii than in the lower 48 states, but they are the same in high-cost areas in the lower 48 states, such New York City and San Francisco, as in low-cost areas.
Some commenters are consumers who wrote to say that, for them, short-term health insurance is much cheaper than what they would have had to pay out of pocket for exchange coverage.
One anonymous commenter, P.B., says, "I am self-employed, and I have a short term plan that is no more or less than I want.... I lost my insurance plan when Obamacare went into effect. The plan I had disappeared, overnight. I would lose my health insurance again with this rule. Insurance shouldn't cost as much as your mortgage payment, yet when I looked at Obamacare coverage I found out that's exactly how much it costs. If this rule stays, I'm going uninsured and I'll just go outside the U.S. for treatment if I get sick."
Another self-employed commenter writes, "Had Short-Term Insurance not been available, we may have found ourselves uninsured when my daughter sustained an injury to her knee requiring expensive surgery."
Jeff Smedsrud is one of the benefits veterans criticizing the proposal. (Photo: Jeff Smedsrud)
3. Brokers and benefits groups
Anonymous Anonymous, who appears to be agent, writes that limiting consumers' ability to use short-term health insurance as a substitute for unaffordable major medical coverage would push consumers to sign up for another type of program that falls outside the reach of Affordable Care Act underwriting and benefits rules: health care sharing ministries.
"More and more are popping up every day," the commenter says.
Jeff Smedsrud, chairman of Fergus Falls, Minnesota-based Communicating for America, a nonprofit association that helps members get insurance products, writes to say his group's understanding, based on information from insurers, is that the average member of the group who buys short-term health insurance is about 41 years old and buys coverage with an average duration a little under five months.
Some people who might actually qualify to buy individual major medical policy, either through an ACA exchange or outside the exchange system, buy short-term health insurance because the enrollment process is so much easier, Smedsrud writes.
"We also have reports from members who tell us they buy short-term medical plans because such plans are usually free of provider network restrictions," Smedsrud writes. "You would have to live in a rural community to know how absurd it is to buy a low-cost comprehensive plan that requires someone to drive two hours to find an in-network provider.
Smedsrud says the tri agencies should get more information about the short-term health insurance market, let short-term health policies stay in place at least 270 days, and let short-term health plans get the same treatment as ACA-compliant major medical coverage in counties with only one issuer of ACA-compliant major medical coverage, or in counties in which ACA-compliant coverage is much more expensive than the state average.
HealthPocket, an arm of Health Insurance Innovations of Tampa, Florida, a major seller of short-term health insurance, says the tri agencies should let short-term health insurance policies last for 11 months.
Given the current open enrollment period system for individual major medical coverage, "this 11-month period coincides with the current maximum term that a consumer can be locked out of the ACA market," HealthPocket says.
HealthPocket says consumers should be able to re-apply for short-term health insurance without restrictions if they live in states that have not expanded Medicaid and their income makes them too high to get Medicaid and too low to qualified for ACA exchange plan subsidies.
Consumers should also be able to buy short-term health insurance without restrictions if they lack legal residence in the United States, their providers do not accept any available ACA exchange plans, or they have shopped for and cannot afford any of the available exchange plans, HealthPocket says.