Roughly three million people were enrolled in short-term health plans in 2019, the year after the Trump administration expanded access to the controversial plans that don't have to comply with the Affordable Care Act, an investigation found.
The number of people enrolled in the plans grew by 600,000 in 2019 compared with the year before, showing that the administration's decision to extend the maximum duration of the plans from three months to up to a year has caused an increase in their availability, according to the yearlong investigation by the House Energy and Commerce Committee.
The eight insurers investigated by the committee require short-term plan customers to disclose their medical history and deny coverage to those with pre-existing health conditions. They also commonly exclude coverage for most common medical conditions, including diabetes, cancer, heart disease, arthritis and substance use and mental health disorders, the investigation found. The committee also examined six brokerage firms that help people enroll in short-term plans.
"The committee's investigation finds that the Trump administration's policy to expand unregulated and misleading plans is a threat to the health and financial well-being of American families, particularly during the COVID-19 crisis. These plans are a bad deal for consumers and oftentimes leave patients saddled with thousands of dollars in medical debt," Energy and Commerce Chair Frank Pallone (D-N.J.) and members Rep. Anna G. Eshoo (D-Calif.) and Rep. Diana DeGette (D-Colo.) said in a news release.
The investigation adds to the evidence about the dangers of short-term plans and misleading tactics used to sell them, which insurance experts have long warned about. Enrollment in these plans, which Democrats often refer to as "junk insurance," has typically been undercounted because they often aren't filed with states' insurance departments as short-term plans and instead are sold through associations, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University.
A report on the investigation was released a few days after House Democrats unveiled legislation to build on the ACA. That bill, which will not be taken up by the Republican-controlled Senate, would do away with the Trump administration's rule that expanded short-term plans. In addition to extending the duration of the plans to almost one-year, the administration allowed insurers to make them renewable for up to three years.
According to the report, nearly half of states ban or restrict the sale of short-term plans. States that allow the plans exercise little authority to monitor and regulate the plans. Brokers often receive up to 10 times the compensation for selling short-term plans as they do ACA-compliant plans. Moreover, the investigation found that customers often receive misleading or incomplete information about limitations or exclusions.
Beyond the major diagnoses often excluded, the plans commonly don't cover prescription drugs, rehabilitation services, and maternity and newborn care. Two companies offered plans that exclude basic preventive care, such as immunizations and routine physicians. All companies investigated deny coverage to pregnant women, and some exclude coverage for birth control.
All short-term plan companies review whether a patient's medical condition could have stemmed from a pre-existing condition after a claim for a service has already been submitted, according to the report. Oftentimes, this review requires the member and doctor to hand over patient records dating back months or years. Medical claims that the insurers can tie to pre-existing conditions are denied.
Insurers also commonly rescind coverage if it determines a patient had a prior health condition or risk factors that weren't disclosed when enrolling. Some insurers also take away coverage and deny claims for members who develop conditions after they enrolled. The reported said that in one case, a plan member was billed $280,000 and had his coverage rescinded after treatment for an infection when the insurer decided that a past ultrasound showed something "suspicious for deep vein thrombosis." Another was billed $190,000 for a heart condition after the insurers said the patient should have disclosed that he was previously diagnosed with diabetes.
The committee further found that these tactics allow insurers to spend very little on healthcare. Across the insurers, the median medical loss ratio, which illustrates how much of every dollar in premiums was spent on medical claims, was 48%, according ot the report. ACA-compliant insurers in the individual market must spent at least 80% of premiums on medical care or quality improvement, or refund the difference to plan members. Short-term plans have no MLR requirements.
The committee concluded that short-term plans should be subject to ACA consumer protections at a federal level and in the absence of federal legislation, states should move to restrict the polices.