Democratic lawmakers at the House Energy and Commerce Committee who hate short-term health insurance have found that the market for that product looked great in 2019.
Nine insurers that provided data for committee investigators said they had 3 million short-term health insurance enrollees in 2019, up 27% from the number of enrollees they had in 2018.
Enrollment in short-term health insurance policies through association programs increased to 2.2 million in 2019, from 600,000.
Fourteen issuers and distributors that work with brokers have been paying brokers commissions from 10% to 40% to sell short-term health insurance, with an average commission rate of 23%, committee officials write in a report summarizing the investigators’ work.
- A link to the House Energy report on short-term health insurance is available here.
- An article about Colorado’s approach to regulating short-term health insurance is available here.
That compares with a typical commission of about 2% for individual major medical insurance plans that meet Affordable Care Act (ACA) individual major insurance standards, officials write.
Defenders of short-term health insurance contend that the product can provide modest amounts of coverage, at a relatively low price, for healthy, uninsured consumers who have a temporary need for coverage and who do not want to go through through the ACA major medical insurance application process; need to buy coverage outside the ordinary, Nov. 1-Dec. 15 individual major medical insurance open enrollment period; want lower deductibles and bigger provider networks than typical individual major medical policies offer; or do not qualify for enough ACA premium tax credit subsidies to make individual major medical insurance coverage affordable.
House Energy officials contend in their report that, too often, insurers and brokers generate short-term health insurance sales by misrepresenting the nature of the product.
Some short-term health insurance issuers, for example, have said that they are offering COVID-19 testing benefits, even though the temporary federal COVID-19 testing benefits mandate exempts short-term health insurance issuers.
House Energy officials cite a survey that the Brookings Institution conducted. Analysts there conducted a “mystery shopper” survey of nine agents and brokers in the short-term health insurance market, which the federal government now officially calls the “short-term, limited duration insurance” (STLDI) market.
Agents and brokers “‘often significantly overstated the degree of coverage a [STLDI] plan would provide and sometimes misrepresented the terms of the plan,’” House Energy officials write. “In addition to significantly misrepresenting the nature of STLDI coverage, agents and brokers also gave either misleading or false information about the circumstances in which COVID-19 symptoms, diagnosis, and treatment would be considered a preexisting condition.”
Before 2014, when most of the ACA major medical insurance standards and medical underwriting ban took effect, most states let both short-term health insurance issuers and major medical insurance issuers use medical underwriting.
Issuers of both types of coverage could decide what they wanted to cover and put annual and lifetime caps on benefits payments.
In 2014, the ACA began to keep major medical insurance issuers from using personal health factors other than location and age in decisions about whether to sell coverage, and from using health factors other than location, age and tobacco use when pricing coverage.
The ACA also imposed many benefits mandates, including bans and annual caps on annual and life benefits for covered “essential health” services, such as inpatient health care.
The ACA imposed loose provider network adequacy and maximum out-of-pocket spending limit rules.
The ACA rules mean that anyone can now buy individual major medical insurance, and get unlimited coverage for catastrophic problems, such as organ transplants, but that an individual who buys the cheapest coverage and gets a broken leg or a ruptured appendix may have to choose from a short list of available doctors, and face a 2020 annual individual deductible of $6,900. Many of those policies pay for non-emergency care only in the local area.
Many uninsured people have reasons for being uninsured that would give them the ability to buy individual major medical insurance at any time of the year. But the ACA “open enrollment period” system would keep many uninsured people from buying individual major medical insurance at all from Dec. 16 through Oct. 31.
The ACA drafters included a provision that let regulators exempt short-term health insurance from the ACA major medical benefits and underwriting rules.
In many states, a short-term health insurance issuer can still use medical underwriting, exclude coverage for pregnancy and mental health care, and design the benefits however it wants.
The result is that, in a state like Missouri, which is warm to short-term health insurance, a 35-year-old woman in Kansas City with serious health problems might not be able to get any short-term health insurance.
A healthy 35-year-old woman in Kansas City could get three months of short-term health insurance from Blue Cross and Blue Shield of Kansas City, with access to out-of-area health care providers, and a $2,500 deductible, with a $5 million lifetime coverage maximum, for less than $85 per month, according to Kansas City Blue.