About 3 million people were enrolled in short-term health plans in 2019, an increase of 27% from the year prior, a new report shows.
The House Energy and Commerce Committee released the results of its yearlong investigation into the impact of these plans and found, on average, less than half of the premiums collected by short-term plan insurers are spent on medical care.
In addition, the committee reviewed compensation rates for 14 insurance brokers and found that the average commission rate for these plans was 23%, compared to 2% for plans compliant with the Affordable Care Act (ACA).
The committee launched its investigation after the Trump administration expanded the length of such plans to 12 months in mid-2018. Short-term plans may offer skimpier coverage and have been derided by critics as "junk plans."
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“These plans are a bad deal for consumers and oftentimes leave patients saddled with thousands of dollars in medical debt," said Reps. Frank Pallone, D-New Jersey, Anna Eshoo, D-California, and Diana DeGette, D-Colorado, in a joint statement. "The heavy-handed tactics uncovered in this investigation demonstrate why Congress must reverse the Trump Administration’s expansion of these junk plans."
The report also found that marketing materials for short-term plans may be misleading to customers and could target people who may be looking to sign up for ACA-compliant plans on HealthCare.gov or their state exchanges.
The analysis also highlights that members may face an onerous claims review process in these plans. All eight insurers backing short-term plans will deny coverage for preexisting conditions, for example, and they may rescind coverage entirely if these health conditions were not disclosed on applications.
The plans also operate with limited oversight from regulators, the committee's report said.
In expanding the plans, the Trump administration argued that they offer an alternative for people seeking coverage on the ACA's exchanges but who may not otherwise be able to afford the premiums.