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AHA Opposes Short-Term, Limited-Duration Health Insurance Policies; Details Potentially Negative Impact in Comment Letter

April 25, 2018

The American Hospital Association (AHA) this week submitted a comment letter to Seema Verma, Administrator of the Centers for Medicare & Medicaid Services, emphasizing concern surrounding a proposed federal rule amending the definition of short-term, limited-duration health insurance policies. The proposed rule would reverse the current limit on short-term policies of less than three months. The AHA cautioned the rule would undermine efforts to promote greater enrollment in coverage that provides vital consumer protections, ultimately reducing costs by balancing insurance market risk pools.

AHA’s comment letter details the potential impact of insufficient health insurance coverage provided by these plans on both individuals and communities. And, it warned that, the proposed rule, if finalized, would contribute to the instability of the individual health insurance markets, decrease access to affordable coverage for vulnerable populations, increase costs for both patients and the federal government, and increase hospital uncompensated care.

Short-term, limited-duration health insurance plans originally were designed to provide temporary coverage to individuals who had a gap in coverage because of a job change, or other short-term situation. The Affordable Care Act limited the duration of short-term, limited-duration health insurance policies which do not offer the comprehensive coverage necessary to protect an individual’s physical, mental and financial health. These policies:

  • Provide inadequate access to care
  • Subject patients to much higher out-of-pocket costs when an illness or injury occurs
  • May not cover some or all of the essential health benefits required in the Affordable Care Act, including hospitalizations, maternity care, prescriptions, mental health care, preventive care, and substance use disorder treatment
  • Attract healthier, younger beneficiaries, increasing premiums for less healthy Americans who purchase insurance in the individual market
  • Do not meet the requirements for minimum essential coverage established under the Affordable Care Act

Because plans are not required to offer comprehensive health insurance coverage, premiums often are lower than other insurance products. Consumers are attracted to these policies because of their lower premiums, not understanding the full details of the inadequate health insurance coverage and the potentially significant out-of-pocket costs they could experience with a serious illness or injury.

The Kaiser Family Foundation published at its website an extensive briefing about short-term limited-duration health insurance policies, their background, and coverage deficiencies. A chart listing major U.S. cities shows that, in Philadelphia, 21 short-term insurance products are available. Of those plans: 

  • Only 57 percent cover mental health services
  • Only 33 percent cover substance use disorder treatment and prescription drugs
  • None of the available plans offer maternity coverage

Hospitals in Pennsylvania and nationwide continue to focus on providing high-quality care in the face of constrained resources. During 2016, hospitals provided more than $38.3 billion in uncompensated care. An increase in uncompensated care would result in even greater pressure on hospital budgets. Ultimately, that fiscal pressure may result in hospitals making difficult decisions about their investment in new medical innovations, the service lines offered, and in particularly difficult situations, forcing hospitals to consider closure. Since 2010, 83 rural hospitals across the nation have closed.

HAP and Pennsylvania’s hospitals continue to advocate for comprehensive health insurance for all Pennsylvanians and convenient, timely access to needed health care services.

Information about the insurance market in Pennsylvania and the impact of coverage may be obtained from Jeff Bechtel, HAP’s senior vice president, health economics and policy, and questions regarding HAP’s federal advocacy efforts should be directed to Laura Stevens Kent, HAP’s vice president, federal advocacy.

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