States face 'blind spots' in short-term plans

Several state regulators say they don't have the authority and capacity to properly regulate the marketing of short-term insurance plans that offer fewer benefits than plans sold on the Affordable Care Act's exchanges, according to a new study.

The study released Thursday from the Georgetown Center on Health Insurance Reforms explored how states are overseeing the marketing of short-term plans after a new HHS regulation expanded the plans' duration from three months to nearly 12 months.

While some states issued warnings and advisories to help educate consumers on the risks of the plans compared with more robust ACA-acquired coverage, the capacity to widely disseminate information is lacking, the study found.

A major concern from state regulators is whether short-term plans are deceptively marketed to residents. The plans offer fewer benefits than a plan sold on an ACA exchange and don't cover pre-existing conditions, potentially leaving consumers with more out-of-pocket costs.

"State officials lack comprehensive data about which insurers actively market [short-term limited-duration plans] to their residents, which one official calling is 'one of our biggest blind spots,' " the study found.

Most states generally enforce plan and marketing standards retroactively after the regulator gets complaints from consumers. But that brings with it another set of challenges for reining in bad actors.

"Resolving the complaint in favor of the consumer is often challenging because little of the purchase transaction is documented in writing," according to the study funded by the Robert Wood Johnson Foundation and the Urban Institute.

States still have the authority to set the standards for short-term plans, including requiring coverage of certain benefits and dictating the plan's duration. States also have the authority to outright ban the sales of short-term plans, which California has done.

A state also can levy fines or injunctions on insurers that deceptively market short-term plans.

The study's researchers spoke from October to December 2018 with regulators in eight states: Colorado, Florida, Maine, Idaho, Minnesota, Missouri, Texas and Virginia. Insurers can market short-term plans in all of the states, but Colorado and Minnesota mandate plans be of a shorter duration than the 12 months allowed in federal law.

Researchers also analyzed marketing in the eight states to see what came up during Google searches for topics such as "Obamacare plans."

Researchers found that the searches often led consumers to "lead-generating" websites that asked the consumer for a phone number or email and then forwarded that information to an insurance broker that sells short-term plans or other products that don't comply with the ACA.

"Lead-generating sites and other sites connecting consumers directly to web brokers or insurers provide limited, if any, information about plan benefits, cost-sharing, or rates," the study said. "The short-term plan insurers' websites provide more information about their plans, such as premiums and plan brochures, than the lead-generating sites, but the insurers' websites do not appear in top search results."

Researchers were concerned that the high prominence of these lead-generating sites could lead to confusion for consumers about what they could get from short-term plans.

Most of the regulators interviewed by researchers weren't alarmed by the potential expansion of the short-term plans, and some noted that short-term plans predated the ACA.

But regulators added that consumers will "likely be confused about the differences between short-term plans and ACA-compliant coverage," the study said.

This concern led Colorado, Florida and Maine to issue advisories and frequently asked question documents on the plans.

Of the eight states, only Minnesota regulators told researchers that they require short-term plans to submit marketing materials before they are released, but no state can review or approve them.

"In many cases, states believe they lack the legal authority to require such advance approval," the study said. "Other officials indicated that, even with legal authority, they would not have the staff capacity to review and assess the marketing materials generated by short-term insurers."

No state conducted a "secret shopper" survey or a review of insurer websites to assess the marketing practices.

Short-term plans have been the focal point of an intense political debate over the ACA. CMS Administrator Seema Verma has said that the plans act as an "escape hatch" for people who don't qualify for the ACA's income-based subsidies and face high premiums.

But Democrats on Capitol Hill charge that the regulation was an act of "sabotage" by the Trump administration to undermine the ACA. Democrats have said that the short-term regulation fits a pattern of "sabotage" that includes cutting enrollment outreach funding and shortening the open-enrollment period.