Skinny short-term plans deny coverage for pre-existing conditions: Commonwealth Fund

By | July 25, 2020

Dive Brief:

  • Most short-term plans fail to provide basic healthcare benefits and many bar enrollees from obtaining coverage altogether, according to a new analysis from The Commonwealth Fund.

  • For example, 100% of the plans in the five studied states — Texas, Oklahoma, West Virginia, Alabama and Utah — denied enrollment based on an applicant’s existing health condition and barred coverage for any pre-existing medical conditions and maternity costs. The majority of plans also didn’t cover outpatient prescription drugs and mental health services.

  • Nevertheless, the Trump administration is continuing to push such plans by creating regulations to expand their availability, recently winning an appeals court ruling to uphold the expansion. The Department of Justice is also pushing the U.S. Supreme Court to eliminate the Affordable Care Act, with the administration’s blessing.

Dive Insight:

Before the Trump administration came to power in 2017, most short-term health plans were available for just three months. Now, they can be renewed for as long as three years. As a result of their promotion, the Congressional Budget Office last year predicted that such plans would become more robust in terms of benefits and coverage.

But “the market forecast by the CBO has not come to fruition,” The Commonwealth Fund wrote on its analysis results. “People enrolled in the short-term market are primarily in very limited plans that the CBO would not count as insurance using its own definition. Even for people enrolled in more-comprehensive short-term plans, preexisting condition exclusions mean claim denials and rescissions are likely to persist.”

The Commonwealth Fund surveyed 414 limited duration plans and concluded few offered tangible healthcare benefits.

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Along with discriminating against potential or existing enrollees who have pre-existing medical conditions, none offered maternity benefits. Nearly three-quarters did not offer prescription drug benefits. For those benefits that were covered, 57% of the plans offered what is known as “low-dollar value limits” set well below the market rate for services, such as $ 250 for an ambulance ride. By contrast, Medicare pays $ 470 for a basic ambulance transport in rural parts of the country.

Only 36% of the health plans surveyed offered mental health benefits, but the dollar amounts they cover are also a fraction of what Medicare covers.

And if enrollees have a catastrophic claim, they may face out-of-pocket costs of as much as $ 25,000, when deductibles and out-of-pocket maximums (the most an enrollee pays for covered services) are combined. By comparison, ACA-compliant plans must count deductibles toward the out-of-pocket maximum, and that’s capped at a little over $ 8,000 this year.

Nevertheless, such plans have a significant number of takers because their premiums are often lower than plans that must abide by the regulations of the ACA. Moreover, numerous studies have shown brokers and companies sell short-term plans using misleading marketing techniques, which can make it difficult for state regulators to crack down on the plans.

“The short-term market continues to place enrollees at huge risk,” The Commonwealth Fund concluded.

For its part, both the Trump administration and America’s Health Insurance Plans have argued the plans are meant to be a low-cost alternative to comprehensive coverage.

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