House Bills Could Set Federal Short-Term Health Disclosure Standards

Rep. Anna Eshoo, D-Calif. (Photo: Eshoo)

House Democrats have introduced two bills that could set federal standards for short-term health insurance disclosures.

Rep. Kathy Castor, D-Fla., has introduced H.R. 1010, the “Short-Term, Limited Duration Insurance

H.R. 1010 would bring back the three-month Obama-era limit on how long a short-term health insurance policy’s benefits can last.

Rep. Anna Eshoo, D-Calif., has introduced H.R. 1143, the “Educating Consumers on the Risks of Short-Term Health Plans Act of 2019″ bill.

H.R. 1143 could set new standards for short-term health insurance disclosures, and prohibit the sale of short-term health insurance policies during the individual major medical insurance open enrollment period.

Eshoo is now the chairwoman of the House Energy and Commerce health subcommittee.

The History

The drafters of the Affordable Care Act exempted short-term health insurance from the ACA rules that apply to major medical insurance.

ACA opponents have seen expanding access to short-term health insurance as one way to help uninsured consumers who are not eligible for high ACA individual major medical premium tax credit subsidies to get affordable coverage, and to help consumers who are unhappy about the narrow provider networks available with many individual major medical policies.

ACA supporters have argued that short-term health insurance often offers skimpier benefits than individual major medical coverage, may offer fewer protections, and may create unfair competition for issuers of ACA-compliant major medical coverage.

The administration of former President Barack Obama to reduce concerns that short-term health insurance would create direct competition for individual major medical coverage by limiting a short-term policy maximum benefits period to three months.

The administration of President Donald Trump recently reversed that regulation and established new regulations that could let a consumer keep the same short-term health insurance policy in place for up to three years.

H.R. 1143

H.R. 1143, the more detailed bill, would keep the current requirement that an issuer inform consumers, with a prominent warning, that short-term health insurance is not the same as individual major medical insurance.

The bill would also require the issuer to include disclosures, in any marketing or enrollment materials, of:

Any physical or mental health conditions that could lead to application denials.
Any conditions for which the issuer might apply a preexisting coverage exclusion.
Any conditions which might lead to an applicant paying higher premiums than other applicants pay.
Any conditions that could lead the issuer to terminate the coverage.

In addition, an issuer would have to provide a standard disclosure warning about the following:

The possibility that the policy might not pay benefits for preexisting conditions, even if the consumer had not been aware of having the conditions.
The possibility that the issuer might rescind the policy if the consumer files a claim in connection with a preexisting condition, even if the consumer had not been aware of having the condition.
The possibility that the policy might provide less coverage, and coverage for fewer services, than an individual major medical policy provides.
The possibility that the policy might not cover the consumer’s costs for most hospital services or physician services.

If passed and implemented as written, the policy would apply to short-term health insurance marketing and enrollment efforts taking place on or after Sept. 1, 2019.