Jessica Altman (Photo: House Energy and Commerce) Jessica Altman (Photo: House Energy and Commerce)

One big problem with expanding consumer use of short-term health insurance is that consumers may have no good way to know what a policy will really cover.

Jessica Altman, the Pennsylvania insurance commissioner, presented that argument Wednesday, in Washington, at a hearing organized by the House Health Energy and Commerce health subcommittee.

(Related: Colorado Sets Blue-Violet Short-Term Health Rules)

A typical short-term health insurance policy covers much less care than ordinary major medical plans cover, and consumers often buy the coverage without understanding the limitations, Altman said at the hearing.

“The plans are sold without consumer access to provider directories, formularies, sample coverage documents, summaries of benefits and coverage, or a uniform glossary,” Altman said.

STLDI

The Affordable Care Act exempts “short-term limited duration insurance” (STLDI) from the requirements the ACA sets for major medical coverage.

The administration of former President Barack Obama imposed new benefits duration limits on short-term policies, in part to keep issuers of short-term policies from cutting into sales of ACA-compliant individual major medical coverage.

The administration of President Donald Trump has eliminated the benefits duration restriction. A state can now let an issuer keep the same short-coverage in place for up to three years.

Issuers and distributors of STLDI products have argued that the products offer coverage tailored to fit what consumers actually want, and what consumers are willing to pay for.

(Related: Only 5% of Our Off-Season Buyers Can Afford Major Medical: Web Broker)

Issuers note, for example, that ACA rules have pushed issuers to make enrollees stick with increasingly narrow provider networks. A typical short-term health insurance policy may use a very large rented network, or come with no incentives or requirements to use providers within any particular network.

The New House

Democrats are now in charge of the House and the House Energy and Commerce health subcommittee.

Many Democrats in Washington and state capitals have been hostile to efforts to expand use of short-term health insurance.

What STLDI Supporters Say

Supporters of the Trump administration efforts, including Grace-Marie Turner, president of the Galen Institute, say Democrats are simply trying to protect expensive, restrictive ACA-compliant coverage against competition.

Turner testified at  the House Energy hearing that Covered California had a hard time attracting new enrollees to exchange plan coverage this  year.

“Marketing doesn’t work when the main reason that people don’t sign up for coverage is because of cost,” Turner said.

STLDI insurance policies typically cost lost than half of what ACA-compliant policies cost, Turner said.

What Altman Is Seeing

Altman argued that, in the real world, STLDI policies may be helpful for people with a temporary coverage group but are not ideal for long-term use.

In one recent, case, for example, the Pennsylvania department helped a woman with STLDI who went to the hospital because she fainted at work.

The insurer eventually paid just $1,300 of the $16,000 in bills, Altman said.

(Related: Private-Equity Backed Air Ambulances Leave Behind $50,000 Bills)

Altman said in the written version of her testimony that the Pennsylvania department has received many complaints from consumers whose STLDI plans failed to provide the coverage expected.

“In the past two years, our department has suspended the licenses of eight producers who misrepresented the coverage available to consumers who purchased STLDI,” Altman said. “But, even in cases where there is no misrepresentation to consumers, it is difficult to understand the extent of the benefit limitations included in these plans until a consumer needs health care and tries to use them.”

In response to the concerns about lack of disclosure, ”we’re creating our own consumer awareness campaign to try to cut through the noise of robo calls, well-place online advertising, misleading website URLs and a lot of fine print that are currently bombarding consumers across the country,” Altman said.

Altman said STLDI issuers’ post-claim underwriting procedures, and the issuers’ freedom from the ACA claim decision review rules, add to the problems with making sure that STLDI users get the benefits they purchased.

In one case, for example, a consumer who had never been diagnosed with having heart failure purchased an STLDI policy, then filed a claim for heart failure, Altman said.

The insurer rejected the claim, saying the claim had manifested in such a way that an ordinary prudent individual would have sought medical treatment, Altman said.

“Short-term plans have repeatedly demonstrated an inclination to deny coverage rather than provide it,” Altman said.

What AHIP Says

America’s Health Insurance Plans (AHIP) — a trade group that represents some short-term health insurance issuers, and many carriers that see expanded sales of short-term health insurance as a possible threat to the major medical market  — said in a written statement that it supports sales of short-term health insurance but agrees on a need for improved disclosure standards.

AHIP says it would still like to see adoption of short-term health insurance disclosure standards it proposed in April.

AHIP has said that, at a minimum, short-term health insurance policy disclosures should address:

  • How pre-existing conditions are treated.
  • Whether preventive care and some benefits on the ACA essential health benefits list might not be covered.
  • Whether spending caps may apply.
  • Whether there’s a possibility that a purchaser might not be able to renew the policy.
  • The fact that people who lose short-term health insurance outside of the individual health market open enrollment period may have to wait till the next open enrollment period to sign up for individual major medical coverage.

Resources

Links to a video of the hearing and the written versions of the witnesses’ testimony are available here.

The AHIP short-term health insurance disclosure standards proposal is available here.

— Read Feds Unleash Short-Term Health Insurance From Obama-Era Limiton ThinkAdvisor.

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