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Analysis Finds Short-Term Health Insurance Plans May Cost Less by Offering Less Coverage

November 06, 2018

A new Kaiser Family Foundation analysis that explores why short-term health insurance plans may cost less than other plans found that savings are often achieved by limiting coverage for pre-existing conditions and by providing less comprehensive benefits.

A new federal policy significantly extended the amount of time individuals may remain enrolled in short-term health insurance plans from three months to up to three years. The stated intent of the policy is to expand access to less expensive alternative insurance options; however, these plans are not subject to the full patient protections and benefits assured under the Affordable Care Act (ACA).

The analysis found that short-term health insurance plans are able to lower premiums by:

  • Excluding coverage of pre-existing conditions (38 percent lower premiums compared to ACA-compliant plans)
  • Excluding or severely limiting benefits, such as prescription drugs, maternity care, mental health, and substance use treatment (16 percent lower than premiums compared to ACA-compliant plans)
  • Adjusting features such as deductibles, coinsurance, and copays; dollar limits on coverage; age and gender rating; and medical loss radio

According to the results of PwC’s Health Research Institute survey on national health plans, 48 percent of respondents support a national health insurance program available to all Americans in which physician practices and hospitals would remain private, while 57 percent support expanding Medicaid eligibility to any US resident. Despite this and the fact that American’s continue to name health care as a top concern, according to a Gallup poll, the Trump Administration continues to promote less-costly, less-generous coverage.

Discussions around these types of health insurance options that were previously prohibited or limited under the ACA continue to draw mixed reactions from industry experts, consumer advocates, and state and federal officials. Pennsylvania Insurance Commissioner Jessica Altman sent a letter to the U.S. departments of Labor and Health and Human Services outlining the state Insurance Department’s position on the implementation of a federal rule aiming to expand one of the options, association health plans. In the letter, Commissioner Altman stated, “I remain concerned that this rule will allow for substandard coverage that will limit consumers’ access to comprehensive health care, and I am committed to ensuring that our laws will continue to provide necessary protections to consumers.”

With the six-week Open Enrollment period underway through December 15, 2018, Pennsylvania Insurance Commissioner Jessica Altman urged Pennsylvanians to be careful where they shop for health insurance. “Some companies and agents are offering plans they say are compliant with the ACA, but are not. The federal marketplace’s website ends in “.gov,” so consumers not shopping on Healthcare.gov are not shopping on the federal marketplace,” says Altman.

HAP and Pennsylvania hospitals have joined with state government, the insurance community, navigators and assisters, and health care organizations across the state to help Pennsylvanians continue to access affordable, reliable health care coverage.

HAP has highlighted important information Pennsylvanians need to know about Open Enrollment in its publications, on its website, and via its Healthy Me PA digital community platforms.

For more information about HAP’s open enrollment advocacy, please contact Jolene Calla, HAP’s vice president, health care finance & insurance.

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