A bill in the Wisconsin state senate expanding short-term health insurance plans would make things worse for Wisconsinites. Short-term Health Insurance Plans, which currently offer limited health coverage for periods of less than a year, are being marketed more aggressively this year in part because of policy changes by the Trump administration have largely eliminated federal regulation of these plans.
Current state law limits short-term plans to terms of no more than 12 months, and a total of no more than 18 months including renewals. The new bill introduced last week in the state Senate would expand that to three years.
Short-term plans do not have to cover the same basic health care services required under the Affordable Care Act (ACA). Insurers offering these plans require applicants to submit health information in order to determine benefits, establish levels of coverage, and set prices. They also use that information to decide who they are willing to cover. Unlike ACA plans, short-term plans do not have to cover people with pre-existing conditions.
Companies often market these plans as a cost-saving alternative to coverage through the ACA marketplace; however, the reality is that they do not meet even minimum health standards. 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 don’t understand their short-term plan’s limitations until they try to access necessary medical care.
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 they 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.
Short-term plans can potentially offer people an option with lower premiums (because they offer skimpier coverage and pay for less care), but 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 proposed legislation undermines the bipartisan Wisconsin Health Insurance Stability Plan, which committed tens of millions in state funds to help insurance companies pay for high-cost patients and lowers premiums for people not receiving tax credits. This legislation would almost certainly raise Marketplace costs.
States are allowed to regulate short-term plans, and in fact, nearly half of the states restrict short-term plans to not more than 11 months[1]. This sends an important message to potential customers that short-term plans are not an equal substitute for more comprehensive health coverage.
Rather than expanding the availability of short-term plans in our state, Wisconsin should join the long list of both red and blue states that protect consumers and the ACA Marketplace by limiting short-term plans.
William Parke-Sutherland
[1]https://www.cbpp.org/blog/states-protecting-residents-against-skimpy-short-term-health-plans