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As the federal government moves closer to lifting the 90-day limit on short-term health insurance plans, the state of California is looking to ban temporary coverage altogether.
Jan Dubauskas, Chief Operations Officer for IHC Carrier Solutions and General Counsel for IHC Specialty Benefits, recently spoke with Cliff Albert at KOGO-AM in San Diego, Calif. about the impact eliminating short-term medical (STM) plans in California would have on consumers, namely:
● A potential increase in the number of uninsured
● A lack of affordable alternatives for those in between ACA plans
Dubauskas and Albert also discuss how IHC, which owns Health eDeals, is working with the state of California, including providing short term plan options that remove some pre-existing condition limitations to make these plans more consumer friendly.
Albert: Jan tell us about this measure that’s been approved that would prohibit the sale of short-term health insurance plans. Now, what exactly would it be?
Dubauskas: Well, it would take the short-term medical plans that are currently available in the marketplace and beginning on 1/1/19 make them completely unavailable.
The problem with that is there are people who have need for a product, for some sort of health insurance for a shorter duration. Say for example, someone who’s between jobs and doesn’t desire to pay the higher cost of COBRA would have the opportunity to normally buy a short-term medical plan instead, which is a much-reduced rate, now won’t have that option at all.
And in 2019 the CBO is estimating that about 3 million people will choose to go completely uninsured and leave the individual exchange. Those people will be uninsured and will have the opportunity to use short-term medical, but unfortunately in California, if this [removal of STM] progresses, then they won’t have this opportunity at all. And it seems that many people may go uninsured.
A: Who’s behind the effort to prohibit the sale of these plans?
D: You know, I think there are some consumer groups that are concerned that short-term medical is taking away healthy lives from the ACA market. And so in an effort to support the ACA marketplace they want to go ahead and remove short-term medical.
What the data spells out and those who have purchased on our website Health eDeals, we’ve been able to see our average duration is 4.2 months. So people are buying short-term medical for short-term needs, they really are. They’re not buying for 12 months and then again for 12 months. I think that the concern is to maintain ACA pool, but our data shows that’s really not what’s taking place.
A: And there are a lot of people who find themselves in this situation where they’re let go or leave a job and they’re faced with COBRA payments that obviously are huge. Can you estimate the size or number of people who are affected by this?
D: The Congressional Budget Office has estimated that about one hundred [thousand] to two hundred thousand people will buy short-term medical next year in 2019. That’s a significant amount of people. I think maybe that number is a little bit short.
But some of the instances are people who are recent college grads who have 3 months to wait before their benefits kick in or someone who loses their job and is waiting til an open enrollment period, they’ve got 3 or 4 months to go, they don’t want to go uninsured and so they would have the opportunity to buy short-term medical now.
I don’t know if many people are aware, but in the state of California, they are actually reviewing short-term medical right now. We’re the only carrier that sells short-term medical in the state of California, and they’re asking us to completely remove the pre-existing condition limitation.
One of the criticisms of short-term medical is that you have to go through underwriting and then any conditions you had prior to purchasing the plan are not covered. What California has asked us to do is to remove that pre-existing condition limitation. It’s the first state to ask the carrier to do that, and we’re working with them on that right now.
The cost of removing the pre-existing condition limitation really isn’t going to change the premium all that much. It’s going to go up about 20%. So a plan that was, for example, $200 a month is now going to be $240 versus an ACA plan that is going to be in your four, five, six-hundred dollar a month range.
So one of the objections to short-term medical is now going away in the state of California. The only other major one being the underwriting, which means that if you are someone who’s had cancer, or if you have some heart issues, you can’t qualify for short-term medical, but really I think we would all agree that people like that should be in the ACA-type plans anyway, where they can get the most robust coverage.
We’re a little perplexed by the move to see if there can be a removal of short-term medical because it does seem like it’s still very much needed in the state.
A: And as you said, this could lead to more people not being covered.
D: Exactly. Exactly. So, if there are 3 million people who drop their coverage in 2019 because there’s no individual mandate, then there are 3 million people out there who now have nothing at all and it seems to me that it would be better to have some sort of catastrophic coverage than nothing.
The whole point of the ACA was to take the uninsured and get them insured, and it doesn’t seem that we have been as effective as we would have hoped with that. And limiting the options by removing short-term medical seems to be again the opposite of where we want to go. I understand some of the concern, but the overall impact is that we’re going to have more uninsured people.
With an average [ACA plan] premium in 2016 of $393 per month, short-term medical in 2016 had an average premium of $124 per month. Those numbers are very compelling to show that short-term medical really is an affordable option for people in ’19. We just want to talk about the bill and talk about how it can be a negative for people to take these options away.
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 California bill to ban short-term plans passes Health Committee - State of Reform. (2018). State of Reform. Retrieved 13 April 2018, from https://stateofreform.com/news/states/california/2018/03/ca-bill-to-ban-short-term-plans-passes-health-committee/