Short-term insurance coverage is not only confusing to consumers, it's leaving many patients with higher out-of-pocket costs, according to a new study.
After spending one hour reading over a short-term benefits plan, many people were left unsure of the plan’s basic benefit standards, cost-sharing parameters, preexisting condition guarantees and other features, according to a recent study (PDF) from the National Association of Insurance Commissioners (NAIC).
The study comes as there's signs enrollment in such plans is on the rise, following a Trump administration order that expanded their length from three months to 12 months.
“There's no comprehensive source of data on enrollment in short-term plans but anecdotal evidence suggests that enrollment is increasing. I'm referring to data from web brokers like eHealth and insurers like Health Insurance Innovations,” Katie Keith, a part-time research faculty member for the Center on Health Insurance Reforms at Georgetown University’s Policy Institute, told FierceHealthcare.“Improved data is something the NAIC is working on—one of the committees is currently in the process of finalizing a ‘data call’ to get more information about the sale of short-term plans in each state.”
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While comprehensive data have yet to be compiled, one web broker reported 70% of its customers who did not qualify for subsidies enrolled in a short-term policy, up from 56% in the same period in 2017. Another insurer reported a 24% increase in the months sold for its short-term plans just in the first few months of 2019, according to NAIC.
A second concern for NAIC is a January 2019 study revealing that brokers are aggressively pushing short-term plans to the point that consumers seeking Affordable Care Act plans are finding far more results for these short-term options. In fact, many of these short-term plans are being marketed through out-of-state associations that are exempt from in-state regulations, the study found.
NAIC, with help from Kleimann Communication Group, created a test for consumers to see whether they could understand a short-term plan. Results showed that few consumers understood the concept—some thought it was a supplemental policy to cover medical bills.
“Our study showed that many consumers still did not understand even after spending an hour looking at the information. This confusion, coupled with concerns about aggressive marketing, makes me deeply concerned that at least some consumers are inadvertently enrolling in short-term plans without understanding the limitations,” Keith said.
And many of the consumers who did not understand the plan assumed it had the same coverage as ACA, including benefits such as maternity care and prescription drug coverage. More importantly, many people did not realize the short-term plan did not cover preexisting conditions and lacked comprehensive coverage. In addition, many patients found the language in the pamphlet difficult to understand.
“These findings confirm what many stakeholders already know: consumers face significant challenges in understanding the differences between short-term plans and other types of coverage,” the report stated. “This lack of understanding—especially when coupled with concerns about the aggressive marketing of short-term plans—likely result in consumers inadvertently enrolling in short-term plans when doing so may not be appropriate for their health needs or financial situation."
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Disclosures alone did not adequately address or reduce consumer confusion, according to the study. Even after spending a long time looking at the marketing brochure, consumers did not notice the federally mandated short-term plan disclosure. Those participating in the study said the disclosure needs something more noticeable such as a “caution” or “warning” heading.
“But because we know these products are being marketed aggressively online and by phone, we have to have more and better disclosures there too—as well as increased advertising, outreach, and education about ACA policies. Consumers won't be able to make a meaningful choice without having all the information,” Keith said.
Considering these findings, NAIC recommends several policy changes for states to consider:
- Model Regulation 171 should include robust standards for short-term plans and perhaps standardized marketing materials.
- The Market Regulation and Consumer Affairs Committee should expedite approval of its call for data collection on short-term plans.
- Policymakers should further regulate short-term plans by limiting their duration or renewability, applying state health insurance mandates to the coverage and increasing oversight of marketing.
“Given the degree of confusion we saw about these products, the government will need to do more to make sure consumers aren't inadvertently enrolling in short-term plans,” Keith added.