We are in the midst of a global pandemic and consumers are being sold short-term health plans that may not cover their treatment if they become infected with COVID-19. While lack of testing for the virus means we do not know how many people are infected, a lack of stringent data collection means policymakers do not know how many people are enrolled in short-term plans. While some short-term insurers say COVID-19 testing is covered, these plans commonly exclude key benefits like coverage for preexisting conditions and prescription drugs and sometimes place low dollar limits on covered services such as the ICU. Short-term plans are specifically excluded from requirements in the new COVID-19 response law, which requires coverage of all services related to COVID-19 testing be covered without cost-sharing. Prior to this crisis, there have been multiple stories of delayed payments and denied claims — including a man left with $35,000 in medical debt because his short-term insurer said his diagnosis of heart failure and diabetes qualified as preexisting conditions, another whose coverage was cancelled six days before heart surgery, and one whose short-term insurer withheld $43,000 for cancer treatment claims for six months as it reviewed his medical history. It already appears similar practices may result in delayed or denied claims related to COVID-19.
The Trump administration has advised consumers to seek less expensive “alternative coverage” that is not subject to Affordable Care Act requirements and touts short-term plans, which has led to greater interest in them. As a result, some Blue Cross Blue Shield plans are starting to join the short-term market, and proposed federal rules loosening nondiscrimination protections could open the market even more. There are limited estimates of total enrollment in short-term health plans at the national level, but those reports are based on assumptions. The National Association of Insurance Commissioners (NAIC) is working with 40 states to collect detailed data on the short-term market, including enrollment numbers, benefit details, and claims and appeals, but the results are not expected to be made public so cannot be used to protect consumers and markets.
We asked insurance regulators in five states what data they currently collect and the hurdles they face in gathering comprehensive information.
States Don’t Have Enough Data
States need data to ensure that consumers are protected and that policies are developed correctly. Insurance department officials in one state reported a rise in complaints from people enrolled in short-term plans, but they had no idea how many residents were enrolled in such plans or how enrollment has grown since the Trump administration relaxed the federal rules governing them. Another state did not know how many insurers, let alone enrollees, are in its short-term market. State policymakers can ensure that regulators have the information they need by requiring data collection that includes, at a minimum, the number of individuals enrolled in each state, the length of enrollment, and how many times the policies were “reissued.”
In developing data-collection requirements, policymakers face certain hurdles specific to short-term plans. They are often sold by out-of-state associations, which are based in one state but sell insurance to residents of other states. One state asserted that it didn’t have the authority to regulate plans sold by out-of-state associations and could only require reporting by insurers licensed within the state. The same regulator said the associations are “really pushing” short-term plans to consumers through robocalls and internet marketing, and those plans are the ones generating most of the consumer complaints. Another state regulator was concerned about the difficulty of identifying which association plans are being sold in the state.
Another problem is how to capture accurate data on enrollment in plans that vary widely in duration, from 30 to 364 days. One state gathers a snapshot of enrollment on the last day of the year. While regulators in this state felt confident they were getting an accurate snapshot of enrollment on that date, that “snapshot” will not capture the complete number of enrollees throughout the entire year because many plans terminate before December 31. Another state reported that having data on average length of enrollment helped them decide to limit — rather than ban — short-term plans because the data showed many people enrolled for short durations.
Consumers who purchase short-term plans are at risk of having inadequate coverage and this is being put to the test with the COVID-19 pandemic. While some states have acted to restrict short-term plans, about half have allowed them to be sold for up to 12 months without knowing what is being sold in their state or how many consumers are facing risk. State policymakers can require regulators to gather information annually and share it with the public. Using these data, they can track changes and trends, including which insurers and associations are marketing to residents in their state. Regulators also can urge the NAIC to require these data be included as part of the annual report that is submitted by all insurers to the NAIC and then shared with all state insurance departments. Better information will help regulators enforce consumer protections and give policymakers the ability to craft policy that protects their health insurance market.