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Inadequate Coverage: An ACS CAN Examination of Short-Term Health Plans

May 13, 2019

Last year, the Administrative finalized a regulation that expands access to short-term, limited-duration insurance products. Short-term plans were originally intended to bridge gaps in comprehensive coverage – for instance, when an individual was between jobs and temporarily without access to an employer plan. Short-term plans traditionally have low premiums but fail to provide the kind of comprehensive coverage an individual would need if they were diagnosed with a serious and unplanned disease such as cancer. Issuers offering short-term plans are permitted to engage in medical underwriting, meaning issuers can deny coverage to people with pre-existing conditions, charge more based on a person’s health status, or refuse to cover services related to an individual’s pre-existing conditions. They are also permitted to impose lifetime and annual limits on coverage and are not required to provide coverage of the Affordable Care Act’s (ACA’s) essential health benefits.

To better understand whether short-term plans would be sold to cancer patients and, if so, what kind of coverage a cancer patient could expect, the paper examined short-term plans in six states:  Florida, Illinois, Maine, Pennsylvania, Texas, and Wisconsin. We examined two zip codes within each of the six states to better understand the extent to which premiums and deductibles varied between rural and urban areas. The goal was, in part, to understand how extensively a short-term plan might cover an unexpected and costly condition that was not pre-existing and therefore not excluded outright.

Key Findings:

  • Issuers offering short-term plans are permitted to engage in medical underwriting, meaning they can deny coverage to people with pre-existing conditions, can charge more based on a person’s health status, or can refuse to cover services related to an individual’s pre-existing conditions. They are also permitted to impose lifetime and annual limits on coverage and are not required to provide coverage of the Affordable Care Act’s (ACA’s) essential health benefits.
  • All of the short-term plans examined excluded coverage for pre-existing conditions – meaning it is unlikely that anyone with a history of cancer or many other health conditions would be able to enroll in or afford a short-term plan.
  • For patients who are able to enroll in a short-term plan, and then are diagnosed with cancer, their plan is likely to leave them with tens of thousands of dollars in costs for their cancer treatment. One of the plans we examined left our patient with over $100,000 in out-of-pocket costs to treat her stage I breast cancer.