States ill-equipped to oversee short-term plans
- States often don't have the authority or resources to regulate short-term health insurance plans, putting consumers at risk of being underinsured and hit with surprise medical bills, a new study finds.
- People shopping online for health insurance, including those searching for Affordable Care Act plans, are regularly directed to websites selling short-term plans or other non-ACA compliant products, according to the study released by Georgetown University's Center on Health Insurance Reforms.
- "Of the two web brokers that appeared in our results, the one selling ACA-compliant plans appeared half as often as the web broker selling only short-term plans and did not appear in results before open enrollment," the researchers say.
Designed as a low-cost, temporary safety net, short-term plans have been a point of contention as the Trump administration has made them more prominent. A CMS final rule last summer extended the plans' initial three-month duration to a year, with the option to renew plans for a total of three years.
A particular concern with short-term plans is deceptive marketing. Officials worry consumers won't be fully informed about what they are purchasing, or may believe they are buying an ACA-compliant plan, according to the study, which focused on marketing practices and regulatory reactions in eight states.
The researchers pointed to "lead-generating" sites that lured consumers in with mention of the ACA's open enrollment, then asked them for an email or phone number, which they forwarded to a broker. "State officials lack comprehensive data about which insurers actively market [short-term plans] to their residents, with one official calling it 'one of the biggest blind spots,'" the researchers say.
All of the officials agreed short-term plans carry risks for consumers, including refusal to pay for services due to preexisting conditions, retroactive cancellation of coverage with certain types of claims and surprise medical bills because of narrow provider networks.
"These lead-generating sites provide little, if any, information about [short-term] plan benefits, cost sharing, or rates," according to the study. "Some of these sites advertise 'free' insurance quotes and prompt the consumer to provide personal information, including a phone number."
Most states are trying to compile data about the market, and some have issued warnings about the risks of such plans, but they lack the capacity to get that information to all consumers. When states do enforce insurance and marketing standards, it is typically after a complaint has been brought.
A few states have taken additional steps to protect consumers. Colorado limits the initial contract duration to six months, while Minnesota imposes a 185-day cap. Minnesota also requires short-term plans to submit advertising materials in advance of releasing it, though no state has authority to review and approve such materials.
Colorado requires insurers and brokers selling short-term plans to file forms and rates annually, and Maine and Idaho are starting to track short-term market activity within their states.
States also reported challenges responding to consumer complaints. "We do try to hold the company or agent responsible," one official told the researchers, "but many times, unfortunately, it's a 'he said, she said' thing, and we can't prove anything."
- Robert Wood Johnson Foundation The Marketing of Short-Term Health Plans