Wyden, colleagues target new ‘junk’ health insurance plans

(Update: Adding Oregon info on short-term insurance plans)

Four Senate Democrats, including Oregon Sen. Ron Wyden, on Tuesday asked the National Association of Insurance Commissioners to begin reporting the harmful consequences of “junk” insurance plans as insurers submit applications to sell the plans to consumers this fall.

The letter, sent by Senate Finance Committee Ranking Member Wyden, Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Patty Murray, D-Wash., and Senators Bill Nelson, D-Fla., and Tammy Baldwin, D-Wisc., asks NAIC President Julie Mix McPeak to begin collecting data on at least 14 measures that may be used to compare junk plans to the comprehensive plans now available due to the Affordable Care Act.

“Expanding the use of these ‘junk plans’ will harm both the people who purchase them, only to discover the care they need is not covered as they had been led to believe, and those in the individual market who will see higher premiums as a result,” the senators wrote. “We are very concerned about the impact of these junk plans on our constituents and the commercial insurance market as a whole. In short, many of these plans are not worth the paper they are printed on.”

The letter comes as the Trump Administration finalized a rule earlier this month allowing insurance companies to sell what were originally short-term, limited-duration insurance plans for nearly a year. These plans do not have protections for people with pre-existing conditions, essential health benefits like prescription drugs and maternity care, and other consumer protections that were passed as a part of the Affordable Care Act.

The full letter can be found here and below.

Julie Mix McPeak

President

National Association of Insurance Commissioners

444 North Capitol Street NW, Suite 700

Washington, DC 20001

Dear Commissioner McPeak,

The Trump Administration’s final rule expanding the availability of short-term, limited-duration insurance (STLDI) plans undermines federal consumer protections, allowing insurers to once again discriminate against people with pre-existing conditions, seniors, and women. Expanding the use of these “junk plans” will harm both the people who purchase them, only to discover the care they need is not covered as they had been led to believe, and those in the individual market who will see higher premiums as a result.

Recently, the Trump Administration promulgated a final rule to expand the sale of short-term, limited-duration insurance (CMS-9924-P). STLDI is intended to be just that–short term and for a limited duration. The Trump Administration’s own rule defines short-term, limited-duration insurance as “a type of health insurance coverage that was designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage.” Currently these plans are limited to three months. However, the Administration’s rule allows these plans to be sold for 364 days and renewed for up to 36 months.

STLDI allows insurers to discriminate against the more than 133 million people across the country with pre-existing conditions by denying them coverage altogether, excluding coverage for a pre-existing condition, or charging them extremely high premiums based on health status, age, and gender. These plans can charge older consumers far more than their younger counterparts for the same policy. They do not have to cover the ten essential health benefits outlined in federal law, and often exclude important benefits such as maternity care, mental health, substance use disorder treatment, and prescription drugs. STLDI plans are not subject to the same rules that require 80 percent or more of premium dollars to be spent on actual health care (the medical loss ratio), and a recent National Association of Insurance Commissioners (NAIC) report shows that some STLDI issuers use as little as 34 percent of premium dollars on health care. These plans can implement high deductibles and arbitrary limits on how much necessary care they will cover. In short, many of these plans are not worth the paper they are printed on.

We are very concerned about the impact of these junk plans on our constituents and the commercial insurance market as a whole. The final rule will take effect on October 2, 2018, and we understand that Insurance Commissioners are beginning to receive plans for approval. We therefore ask that you survey Insurance Commissioners and keep us apprised as these applications are being approved by reporting the following information back to us quarterly during the 2019 plan year regarding plan approvals by state:

1. How many short-term, limited-duration plans did Commissioners approve in each state? How many issuers sold these plans?

2. How many and what percentage of plans approved cover maternity care?

3. How many and what percentage of plans approved cover prescription drugs?

4. How many and what percentage of plans approved cover mental health and substance use disorders services? Do they clearly meet mental health parity and addiction equity requirements?

5. How many and what percentage of plans approved deny coverage entirely if the applicant has a pre-existing condition?

6. How many and what percentage of plans approved exclude or limit coverage for pre-existing conditions?

7. How many and what percentage of plans approved have annual, quarterly, lifetime or time-based limits on coverage?

8. How many and what percentage of plans approved implement an age tax (charge more for older applicants)?

9. How many and what percentage of plans approved make the plan renewable at the outset?

10. How many and what percentage of plans approved place restrictions or limitations on renewability based on the applicant’s age or pre-existing condition?

11. What are the deductibles for individuals and families in each plan?

12. What are the benefit maxima in each plan?

13. What medical loss ratio does each plan report?

14. How many plans that cover up to 364 days are sold in the state?

In addition we request that you share these plans’ applications and marketing materials, especially those that insurance commissioners have found to be misleading to consumers.

—

Upon learning of Wyden’s letter, the Oregon Department of Consumer and Business Services asked to share this information:

The Oregon Division of Financial Regulation reviewed the federal rule about short-term, limited-duration insurance. It is important to note that the federal regulation does not limit a state’s ability to establish laws regarding these plans.

It is a violation of Oregon law to market, sell, or offer short-term health insurance policies that exceed three months, including renewals, and a new policy cannot be issued to a customer within 60 days of expiration.

Short-term health insurance plans often seem cheaper than traditional health insurance, but buyers must take warning. They may offer a lower monthly premium, but these plans provide coverage only for limited medical expenses.

Insurance is intended to protect you from large financial risks. While the monthly price of a short-term health plan can seem attractive, it can leave you with expensive medical bills.

Before purchasing a short-term health plan, be sure to understand the risk of buying one by carefully reading the policy and asking these questions.

1. Can I qualify for a special enrollment period or find financial help?

If you are looking for health insurance outside of open enrollment, Nov. 1 – Dec. 15, check to see if you qualify for a special enrollment period and apply for financial assistance.

There are many life events, such as getting married, having a baby, getting divorced, losing coverage through work, and moving that may qualify you for a special enrollment period. Visit Healthcare.gov at https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/ to see if you qualify, and apply for financial assistance through the Oregon Health Insurance Marketplace at http://www.oregonhealthcare.gov/ .

ll Oregonians who purchase their own insurance are encouraged to apply for assistance, even if they did not qualify previously. Oregonians who receive help with the costs of their health insurance pay on average $138 a month.

2. What is the definition of pre-existing conditions and does the plan cover them?

A pre-existing condition is any injury, illness, sickness, disease, or ailment that existed before health insurance coverage began. Pre-existing conditions can be physical or mental. It is important to know if the short-term plan will cover symptoms, treatments, and prescriptions related to any of your specific pre-existing conditions.

3. Does the plan have a network of doctors and specialists?
Many health insurance plans have a network of doctors, specialists, and providers they contract with to help control costs. The price difference between using a doctor that is in your health plan’s network versus one that is not can be astronomical.

Many short-term plans do not have a network of providers and offer only a dollar limit of coverage. This could leave you paying high out-of-network fees for everything from emergency services to routine preventive care.

4. What are the deductibles and maximum dollar amounts of coverage?

It is essential to understand how much you will have to pay in addition to the monthly premium. If the monthly premium seems too good to pass up, make sure you can afford the out-of-pocket costs, especially the amount you must pay before insurance coverage starts.

Before buying a short-term plan, review the exclusions, ask questions, and make sure you understand how limited it can be. It is necessary to understand all the risks before buying a short-term health insurance plan.

If you have questions, concerns, or problems with your short-term health plan, insurance company, or agent call one of the Division of Financial Regulation’s consumer advocates at 888-877-4894 (toll-free).