Some Democratic lawmakers are worried that looming Medicaid redeterminations could result in a surge of signups for short-term health plans, as Americans kicked off the safety-net coverage turn to other insurance options.
Though it’s a valid concern, it shouldn’t be a big one, given the availability of more affordable and comprehensive plans through the Affordable Care Act market, according to insurance experts.
However, the Biden administration should still act to limit short-term, limited duration plans, which fail to protect those with preexisting conditions, routinely deny claims due to health status, retroactively cancel coverage for enrollees and cause exorbitant surprise bills due to a lack of in-network providers, they said.
Currently, short-term plans are banned or restricted in roughly half of U.S. states.
“Some of the short-term plan marketing can be misleading,” said Matt Fiedler, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy. “The concern is that there are people who really should be making their way into the marketplace when they come off Medicaid and are going to be lured away into the short-term market instead.”
ACA plans present cheaper, more comprehensive option
One of the more controversial health policy actions of the Trump administration was expanding the duration of short-term plans and opening them up to all consumers. The plans, which were originally designed as cheap safety-net coverage for just three months, aren’t required to cover the 10 essential health benefits under the ACA.
As a result of the expansion, enrollment in the plans grew to an estimated 3 million in 2019, according to a House investigation.
President Joe Biden has slammed the coverage, but his administration has yet to reverse the Trump-era rule.
Earlier this month, Democratic leaders of the House Energy and Commerce Committee sent a letter to the HHS, Labor and Treasury departments urging them to roll back short-term, limited duration plans before Medicaid’s continuous enrollment requirement ends, saying they’re worried millions of consumers could be shunted onto the “junk” coverage.
Medicaid eligibility checks were paused during the COVID-19 public health emergency, causing the program’s rolls to swell to more than 80 million Americans. But the continuous coverage protection ends March 31, at which point states can restart eligibility determinations.
Roughly 18 million people are expected to lose Medicaid coverage as a result, according to the Urban Institute. Of those, more than 1 million people will enroll in the nongroup market, including the marketplaces established by the ACA. Some 3.8 million people will become uninsured.
That’s the population at risk of winding up on short-term plans. But it’s hard to gauge how big of a problem this could be, given there’s little comprehensive data on short-term plan enrollment now, researchers said.
Along with other health insurers eager to nab new members, short-term plan operators will likely ramp up their marketing starting in April to target those shopping for health insurance amid the Medicaid churn.
Misleading marketing tactics and consumers unsure of their insurance options could result in more people signing up for coverage that’s not right for them, according to experts.
Non-ACA plans have a documented history of deceptive marketing. Sales representatives often misrepresent the coverage to consumers, urge them to buy plans over the phone without adequate information, or fail to disclose major coverage limitations, including preexisting condition exclusions.
“Unfortunately, a lot of that marketing hides the ball in terms of what the coverage in short-term plans actually is, and what's really covered and what's not,” said Sabrina Corlette, director of the Center on Health Insurance Reforms at Georgetown University.
Misleading marketing can present short-term plans as cheaper than alternative options, including ACA coverage, to tempt cost-conscious Americans into selecting the coverage.
But more Americans are now eligible for subsidized marketplace coverage in the ACA exchanges, thanks to COVID-19-era financial assistance that Congress recently extended through 2025.
Now, people with incomes over 400% of the federal poverty line are eligible for subsidies, and those with lower incomes get even more financial assistance. For example, people with incomes under 150% of the poverty line can get a plan with $0 monthly premiums.
As a result, short-term plans can cost hundreds of dollars more per month than marketplace plans, and have significantly higher cost-sharing. In a secret shopper survey conducted by the Center on Health Insurance Reforms, marketers recommended plans with monthly premiums ranging from $70 to $300.
“The short-term policies, because of their costs to people who are very low income, I think it’d be a hard sell for brokers in that market,” said Sara Collins, who leads health insurance coverage at the Commonwealth Fund.
Another reason insurance experts aren’t overly concerned about a spike in short-term plan enrollment is due to the open window for ACA enrollment during Medicaid redeterminations.
One reason people have historically turned to the skimpy coverage is because they’ve missed the deadline to enroll in an ACA plan, and don’t have a qualifying life event to enroll outside the window.
That doesn’t apply during the Medicaid unwinding, because the Biden administration declared a special enrollment period and states that operate their own exchanges are expected to follow suit, according to industry experts.
‘A theoretical possibility’
The HHS in a recent rulemaking agenda said it intends to issue a proposal addressing the short-term health plans’ expansion by April. That timeline isn’t binding, and it’s hard to say how much of a priority this should be for regulators, researchers said.
Along with a lack of clarity into how many people are enrolled in short-term plans, even if regulators issue a proposal now it’s unlikely it could be finalized until the very end of redeterminations, given the length of the rulemaking process. Yet, health policy experts said the HHS should still act to limit the availability of these plans to address a part of the market that leaves Americans underinsured.
It’s also key for the Biden administration and state Medicaid and exchange agencies to target marketing efforts and consumer assistance to people who newly lose Medicaid coverage, so they’re not tempted by misleading short-term plan marketing, experts said.
The CMS has been working with states for over a year to update enrollee contact information, including bolstering their administrative workforces and implementing outreach and beneficiary communications strategies around unwinding enrollment, including social media campaigns and community partnerships.
"I’d like to think that the outreach for the ACA plans is going to be widespread and robust enough that it drowns out the crappy ones,” said Sarah Lueck, vice president for health policy at the Center on Budget and Policy Priorities.
Consumers unknowingly selecting bare-bones coverage is a bigger worry in states that haven’t restricted sales of the plans and haven’t expanded Medicaid, researchers said.
The 11 states that have yet to expand Medicaid, like Florida and Texas, tend to have more low-income citizens and fewer regulations, so are more hospitable for insurance issuers who might want to skirt the rules and misrepresent their offerings, according to CHIR’s Corlette.
But overall, worries that Medicaid redeterminations could result in a large amount of consumers ending up in short-term plans are probably overblown.
“Is it a theoretical possibility? Yes. Is it likely to be quantitatively large? My suspicion is the answer is mostly probably not,” USC-Brookings’ Fiedler said. “But there’s uncertainty around that.”