Study: Short-term health plans market themselves as ACA replacements—despite coverage deficits

Seema Verma speaking at press conference
Seema Verma's CMS has been largely supportive of short-term health plans. (whitehouse.gov)

Consumers shopping online for ACA plans may instead find short-term plans with skimpier benefits, according to a new study.

Short-term health insurance plans are on the rise, with the blessing of the Trump administration. These plans are able to achieve lower premiums because they aren't obligated to provide the same level of protection as Affordable Care Act-compliant plans.

But consumers can have a hard time making that distinction, according to a study by the Georgetown University Health Policy Institute. And that prevents them from making a fully informed choice about their coverage decisions. And, the researchers found, insurers that offer short-term plans often market them as cheaper alternatives without necessarily disclosing all the differences, further muddying the waters.

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"These websites and brokers often fail to provide consumers with the detailed plan information necessary to inform their purchase. Most often, brokers push consumers to purchase a plan over the phone without seeing written information or time to think about the decision," the researchers wrote.

RELATED: CMS actuary undermines Verma: Short-term plans lead to higher premiums, steeper enrollment drops

Furthermore, the marketing for these plans can be extensive—even more so than for ACA plans offered by the same insurer. Researchers in the study used Google search to find health insurance options during ACA open enrollment season, and most of what they found were short-term options.

"Generally, regardless of the search terms used, companies selling short-term plans dominated the returns," the researchers wrote. "Even during ACA open enrollment, only 19% of searches … returned sites offering solely ACA-compliant plans. Before open enrollment, the return was less than 1%."

The Trump administration finalized a plan last summer to expand the length of short-term plans to 12 months. Department of Health and Human Services Secretary Alex Azar said these plans enhance patient choice and provide an alternative to the ACA exchanges amid rising premiums.

But the coverage differences between a short-term plan and an ACA plan are considerable—particularly if a consumer has an unexpected medical event—leading top payer and provider groups to condemn the expansion. Short-term plans may lack protections for people with pre-existing conditions and are not required to cover essential health benefits mandated in the law, such as maternity care or prescription drugs.

RELATED: Changes to ACA innovation waivers could broadly redefine what counts as coverage—KFF

Critics have also warned that this could end up making ACA-compliant plans more expensive, if younger, healthier people leave the exchanges for these cheaper alternatives. The study warned that a large share of consumers would be at risk of going underinsured unless more oversight is provided for short-term plans.

"Short-term plans, depending on how they are marketed and sold, can be risky for consumers because many buy these plans mistakenly believing that they are as comprehensive as traditional, ACA-compliant plans," the researchers wrote.

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