Report finds short-term insurance policies touted by White House lacking

WASHINGTON – The patient enrolled in two consecutive short-term health insurance policies issued by the same company. When he bought the second, he got treatment for a heart condition. Golden Rule, the UnitedHealthcare subsidiary that sold the patient both policies, refused to pay.

The company said the claims submitted were for a condition diagnosed during the first plan. So it was a pre-existing connection, not covered in the second.

The situation brings up a big shortcoming in relying on the short-term plans being pushed by the Trump administration as a cheaper alternative to Affordable Care Act (ACA) benefits, according to a new 197-page report from the Health Subcommittee of the House Energy and Commerce Committee.

The report recounts dozens of cases of consumers denied coverage for medical conditions because they chose short-term health insurance policies.

The issue has attracted increased scrutiny because the president has asked the Supreme Court to kill the ACA. It comes at a moment when 5.4 million Americans have lost company-paid health insurance because the coronavirus pandemic forced businesses to close.

Roughly half of U.S. states — including Minnesota — restrict or ban short-term health plans to protect consumers.

A spokeswoman for the health insurance industry's major trade group said short-term plans, also called limited-duration health insurance, play an "important role." But they were never envisioned as a long-term substitute for regular health insurance, said Kristine Grow, vice president for communications at America's Health Insurance Plans (AHIP).

"When you look at one year and beyond," she said, "it is important [for consumers] to know what they cover and what they don't."

The limited-duration plans are meant to temporarily protect people from catastrophic medical costs if they are between jobs. The premiums can be much less expensive than ACA exchange plans, but co-payments are often very high.

Under President Barack Obama, the plans were limited to three months and nonrenewable. The Trump administration issued an order in 2018, upheld by a court about a year later, that the short-term plans — which do not have to adhere to ACA mandates — can be sold for up to 12 months with the option to renew or extend the plans for 36 months.

The question being probed by the House is whether allowing these short-term plans to be renewed for up to three years is suitable for consumers.

After looking at claims data from short-term insurers, the subcommittee criticized everything from coverage limits on pre-existing conditions to generous broker commissions, high consumer deductibles and co-payments, deceptive marketing and poor government oversight.

"While consumers may experience up front savings in premiums, individuals are faced with significant out of-pocket expenses, and limitations and exclusions when they need health care," the committee concluded.

The report said that the combination often eats up all the savings that come with cheap premiums and can leave consumers deep in medical debt.

The subcommittee report cites Golden Rule in 42 examples of what investigators deemed shortcomings in short-term health insurance.

But Golden Rule is by no means the only company that the subcommittee cites for failing to cover pre-existing conditions or applying severe coverage limits and high deductibles and co-payments for services. Blue Cross of Idaho Health Service Inc., National General Accident and Health, Arkansas Blue Cross Blue Shield and Everest Reinsurance Company are among the others cited.

UnitedHealthcare in a statement said its short-term plans are "a flexible, affordable option that can help people bridge a gap to longer-term coverage — especially at a time when tens of millions of Americans are losing access to employer-based coverage due to COVID-19."

The Minnetonka-based insurer said Golden Rule makes clear to policyholders what to expect from the plans. Golden Rule's "decline rate [for claims] is in the low single digits," it said.

"The plans, which are regulated by both the federal and state governments, are a small part of the range of health insurance solutions that can help achieve the goal of universal coverage for all Americans," UnitedHealthcare said. "Such plans do not meet the needs of everyone, so people should assess what health coverage makes most sense for them and their families."

As President Donald Trump tries to craft his own brand of health care reform, he has relied on broadening access to short-term health insurance.

"President Trump has brought more affordable insurance options back to the market, including through allowing the renewal of short-term plans," a spokesperson from the Department of Health and Human Services said in an e-mail. "We've been abundantly clear that these plans aren't for everyone, but short-term plans can be an affordable option for millions of men and women left behind by the Affordable Care Act."

Currently, 25 states allow short-term plans to be issued for up to one year and renewed for up to three years. In Minnesota, consumers can have coverage under short-term health insurance plans for up to 12 months.

Larry Levitt, vice president for health policy at the Kaiser Family Foundation, said short-term plans place so many limits that they may actually cost more than ACA plans if they are used for anything other than a potential security blanket.

Besides pre-existing conditions, many do not cover pregnancy, mental health treatment or prescription drugs, Levitt said. They also often include annual and lifetime payment caps.

"Short-term plans create the appearance of an affordable alternative," he said. "But that's only true if you don't get sick."

A study of expanded use of renewable short-term health insurance plans conducted for the Leukemia and Lymphoma Society concluded that "a newly diagnosed lymphoma patient enrolled in [short-term insurance] in 2017 could pay $16,800 more in out-of-pocket expenses, including premium and member cost sharing, within six months following diagnosis than a lymphoma patient enrolled in an unsubsidized ACA-compliant policy."

Critics also said several insurers have promoted the policies without adequate explanation of details

The House subcommittee report said many brokers also make much higher commissions selling short-term health plans than they do selling traditional health insurance. The subcommittee found that 600,000 more individuals enrolled in short-term health insurance in 2019 than in 2018, when the Trump administration began promoting them because of low premiums.

Since the Trump initiative, UnitedHealthcare now offers a TriTerm policy. Purchasers apply once for 36 months of coverage. Pre-existing conditions may be excluded. But covered conditions discovered after the effective date of the policy cannot be considered pre-existing for the 36-month term of the policy.