The Georgetown University Health Policy Institute puts out great health policy data and analyses.
Sabrina Corlette and JoAnn Volk, institute analysts, recently posted an interesting blog entry, on the institute’s Center on Health Insurance Reforms website, about Volk getting a call from an insurance agent who misrepresented short-term health insurance. I think the implications of the story are relevant to sellers of Medicare products and long-term care insurance as well as major medical coverage.
Short-term health insurance is not the kind of “minimum essential coverage,” or major medical coverage, that frees an individual from having to pay the Affordable Care Act penalty on the uninsured, and underinsured.
The agent reportedly told Volk not to worry about the ACA individual mandate penalty, assuring her, “There are ways not to be fined.”
Of course, the agent was wrong to talk that way. The agent might be contributing to individual major medical application fraud.
Corlette and Volk then write about how much better ACA-compliant coverage is than short-term health insurance is. This is where I stopped nodding and started muttering.
One problem with short-term health insurance, from the perspective of someone who likes the idea of everyone having major medical coverage, is that short-term health insurance is medically underwritten. Sick people can’t get it, or can’t use to cover conditions they already have.
Another concern is that, because short-term health insurance issuers fall outside the ACA benefits rules, the issuers can offer skimpier benefits. The issuers can offer coverage that’s cheaper than major medical coverage by using a combination of medical underwriting and skimpier benefits to hold claims down. If the short-term health issuers attract too many healthy people with low premiums, that can hurt major medical issuers and drive up the cost of major medical coverage.
Still another concern is that, as hard as it is to know how well a major medical plan issuer is administering claims, it’s even harder to know how well a short-term health insurance issuer is paying claims.
Those concerns aside, the idea that ACA-compliant coverage is necessarily better for a healthy consumer who can’t qualify for rich ACA individual major medical premium subsidies than short-term health insurance from an honest, efficient issuer is absurd.