Dive Brief:
- More consumers are buying short-term insurance policies which they say are cheaper than ACA plans, The Wall Street Journal reported.
- However, many of these plans don't meet ACA standards by not covering pre-existing conditions and most prescription drugs and capping total benefits.
- eHealth found close to 147,000 people bought short-term policies on its site last year, more than double the amount in 2013.
Dive Insight:
The ACA may actually be increasing sales of short-term policies, according to insurance agents quoted in The Wall Street Journal, due to several reasons. Enrollment in ACA plans is limited to specific enrollment periods whereas short-term plans can be purchased year-round. In addition, ACA plans offer narrow provider networks to reduce costs but short-term policies usually offer broad networks.
In a recent survey, eHealth found 51% of short-term policy buyers said the lower price was the determining factor while 39% said they only needed temporary coverage.
Those who develop health problems can always switch to a ACA plan to cover pre-existing conditions.
Some argue these short-term policies can reduce the number of healthy people enrolled in ACA plans that are needed to balance costs. The short-term policies also offer a higher profit margin for payers, Raj Bal, an insurance industry consultant told the Wall Street Journal, because they pay little in claims on them.
Two of the biggest insurers, Anthem and UnitedHealth, offer short-term policies and smaller companies are beginning to do so. Health Insurance Innovations Inc. said in a recent call with analysts it is targeting its market to the 40% of consumers who buy their own coverage -- especially the young and healthy who claim these policies save them money compared to ACA plans.