A report from the House of Representatives Committee on Energy and Commerce found that enrollment in short-term health insurance plans increased about 27 percent from 2018 to 2019, and Wisconsin is among the ten states with the highest enrollment. Short-term plans do not have to cover the basic health care services required under the Affordable Care Act (ACA).

The report includes information from eight insurers who sell short-term plans. Approximately 3 million people nationally are enrolled in these plans, which is likely a low estimate because the committee reviewed information from eight companies even though it requested information from 14.

According to the report, Wisconsin is one of ten states with the highest number of people enrolled in short-term plans. Approximately 100,000 Wisconsinites had short-term plans in 2019. In comparison, nearly 200,000 people signed up for coverage on the ACA insurance Marketplace through healthcare.gov.

The report found that insurers frequently deny or limit coverage for short-term plans, set harsh limits on how much they will pay, and retroactively bill patients for care they received if the insurer determines after the fact that it was related to a prior medical issue that was not disclosed when someone applied. On average, less than half of the premium income from short-term plans is spent on medical care. By contrast, ACA-regulated plans are required to spend at least 80 percent of premium revenues on medical care and give unspent premium dollars back to consumers.

Insurers offering short-term plans require applicants to submit health information to determine benefits, establish levels of coverage, and set prices. They also use that information to decide who they are willing to cover, and according to the report exclude people with potentially costly conditions like cancer, diabetes, and heart disease. Insurers sometimes rescind coverage if they find that someone had a prior health condition that should have been divulged. This can leave folks with no coverage and large medical bills. Since none of the plans reviewed provide maternity or new-born care and they require women to disclose whether they are pregnant, the report also finds that these plans discriminate against women. Lastly, the report notes that short-term plan “marketing materials and brokers provide misleading or incomplete information, including failing to disclose relevant plan limitations and exclusions.”

Companies often market these plans as a cost-saving alternative to coverage through the ACA marketplace; however, the reality is that they do not cover essential health benefits. Short-term plans could leave consumers in the lurch if they need prescription drugs or to access treatment for common issues such as mental health care, substance use challenges, or chronic pain. What’s worse, people often do not understand their short-term plan’s limitations until they try to access necessary medical care.

Short-term health insurance plans were marketed more aggressively last year in part because policy changes by the Trump administration have largely eliminated federal regulation. In fall of 2018, the Trump administration expanded the availability, length, and renewability of short-term health insurance plans and association health plans. One year later, enrollment rose significantly.

In late 2019, we reviewed some of the short-term plans on file with the Office of the Commissioner of Insurance to see what they cover, what they exclude, and how different they are from ACA regulated plans sold on healthcare.gov. Plans differ, but our findings are similar to the federal report. Short-term plans have very high potential out-of-pockets costs, limits on how much the companies are willing to pay during the term of the policy, and frequently exclude coverage for maternity care, prescription drugs, and mental health services. Check out our report, Don’t get Caught Short, to learn more.

Unfortunately, the congressional report has no data on who is covered by short-term plans other than total enrollment. Because it does not disaggregate enrollment by age, race, or sex, we don’t know specifically how these plans impact people of color, but we can use other data to make some inferences. Because of current and historical discrimination, Black and brown people have higher rates of unemployment and under-employment than white people and are more likely to have lower paying jobs that do not offer health coverage. People of color are not only far more likely to be uninsured, but also more likely to have prior health conditions such as heart disease, diabetes, and asthma, which insurers consider pre-existing.

For these and other reasons, it’s possible or likely that short-term plan insurance carriers deny coverage more often to people of color. If they were enrolled in one of these skimpy plans, they might be at greater risk for having treatment denied or coverage rescinded and being stuck with insurmountable medical bills.

Short-term plans offer skimpier coverage and pay for less care, so they can potentially offer people a lower-premium option; however, they may end up costing consumers much more. Further, luring healthier people away from ACA-regulated plans threatens to increase Marketplace costs for everyone else. As healthier people leave, sicker people or people with pre-existing conditions, who rely on comprehensive coverage, end up getting charged more and more. Over time, this cycle would threaten to destabilize the Marketplace.

The House report recommends that federal government or states protect consumers from these plans by limiting their duration to no more than 90 days and making sure they cannot be renewed. It also recommends not allowing companies to sell short-term plans during the ACA Open Enrollment period and requiring them to abide by the consumer protections in the ACA.

We believe that everyone should have access to affordable, comprehensive health coverage. Short-term plans are not comprehensive, and consumers often find they are much less affordable then they first appear. The significant number of Wisconsinites who have “coverage” from a short-term plan is troubling, especially during a pandemic where access to affordable, comprehensive health care is essential.

William Parke-Sutherland