Dive Brief:
- Short-term health insurance policies continue to increase in demand even though they don't include benefits such as prescription drugs or maternity coverage, can reject applicants based on their medical history, according to a report from The New York Times. This is also the kind of plan the Obama administration had hoped to get rid of with the ACA.
- Purchasers of these temporary policies are usually filling a coverage gap and need a basic policy to cover an emergency without the higher costs of regular health policies.
- Although the ACA has lowered the number of uninsured to a record low of 9.1%, according to the latest federal data, insurers may increase premiums next year for policies sold through the ACA marketplaces.
Dive Insight:
Short-term policies that don't meet marketplace requirements don't count under the ACA and penalties rose to $695 this year. However, with concerns over potential double-digit premium increases next year for policies sold through the state exchanges, younger people are willing to forgo basic benefits for temporary coverage.
Covered California expects premiums to increase 8% next year - double the increase from the past two years at 4%.
One company, eHealth, said its sales of short-term policies increased from 60,000 in 2013 to about 140,000 in 2014 and 2015, and demand remains consistent.
Consumer advocates, however, are concerned that people aren't aware of the potential risks of these types of policies and don't understand what they cover or don't cover.
In addition, Betsy Imholz, special project director at the Consumers Union, a division of Consumer Reports, said the temporary policies are taking younger, healthier consumers out of the regular insurance pool and that may jack up rates.