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 coverage 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.