Relaxing restrictions on junk insurance plans threatens affordability of comprehensive coverage and puts “short-term” plan enrollees at risk
RALEIGH (August 1, 2018) – Today the Trump administration issued a final rule allowing the sale of “short-term” health benefits plans that can last for up to three years. These plans are not “health insurance” under federal law, and are therefore exempt from the requirements of the Affordable Care Act. For that reason, short-term health plans jeopardize the health access and the financial stability of anyone who enrolls in them, and by creating a parallel health insurance market designed to poach young and healthy enrollees away from ACA-compliant plans, this new rule will cause premiums to increase for North Carolinians in need of real health coverage.
Insurers who sell these products engage in the deeply unpopular and harmful industry practices that contaminated the insurance market before the ACA became law. By design, these plans keep their prices low because they cherry pick whom they will cover through discrimination and because they seldom cover essential health care benefits that North Carolinians rely on. Short-term health plans routinely engage in open discrimination against people with pre-existing conditions, whether by denying coverage outright, charging exorbitant premiums, or refusing to cover services related to a pre-existing condition.
The plans regularly include annual caps and lifetime limits on covered benefits, leaving enrollees vulnerable to catastrophic medical debt in the event of an unexpected diagnosis or accident.
These plans are also not required to cover essential health benefits, including preventive health screenings like mammograms and wellness visits.Analysis from April 2018 reviewed 16 short-term products available in Charlotte, North Carolina and found that the vast majority provided no coverage for prescription drugs, mental health services, and substance use disorder treatment, and not a single plan covered maternity care and treatment.
“This rule may be the deepest gash we’ve seen as part of the Trump administration’s ‘death by a thousand cuts’ approach to undermining the Affordable Care Act,” said Brendan Riley, policy analyst for the NC Justice Center’s Health Advocacy Project. “By allowing these discriminatory, bare-bones plans to be sold for up to a year and renewed for up to three years, the administration is creating an alternate market to the ACA that will pull away young and healthy enrollees who get duped by the false promises of low premiums.”
“Unfortunately, since the administration slashed Navigator funding by 84 percent in our state, there will be fewer resources to help North Carolinians understand the risks of these plans compared to full ACA-compliant coverage,” said Riley.
As these plans recruit more enrollees, comprehensive coverage could become even more expensive and out of reach for those who need it. An Urban Institute study estimates that relaxing restrictions on these plans in conjunction with eliminating the individual mandate penalty will cause North Carolina premiums to increase by 17.8 percent, and cause 115,000 to lose comprehensive insurance coverage. Actions like this and others designed to sabotage the ACA are the reason that Blue Cross’ premiums for 2019 will be higher than necessary, and continued uncertainty will only destabilize the market.
North Carolina lawmakers in the General Assembly should take action to limit the damage these plans can cause to our insurance market and to North Carolinians.