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Rauner vetoes limits to short-term health insurance plans

Monday, Aug 27, 2018

* August 8th New York Times

The Trump administration’s efforts to allow health insurers to market short-term medical plans as a cheap alternative to the Affordable Care Act are already running into headwinds, with state insurance regulators resisting the sales and state governments moving to restrict them.

State insurance regulators, gathered over the past three days for a meeting of the National Association of Insurance Commissioners, expressed deep concern that short-term plans were being aggressively marketed in ways likely to mislead consumers. Many said the plans, which need not comply with the Affordable Care Act’s coverage mandates, were a poor substitute for comprehensive insurance.

“These are substandard products,” sold on the premise that “junk insurance is better than nothing” for people who cannot afford comprehensive coverage, Troy J. Oechsner, a deputy superintendent at the New York Department of Financial Services, told the insurers.

* CBS News report from early August

For instance, a standard silver plan under the ACA now averages $481 a month for a 40-year-old nonsmoker. A short-term plan might cost as little as $160 a month, according to some estimates.

But lower premiums may be deceptive, says Karen Pollitz senior fellow, health reform and private insurance at the Kaiser Family Foundation. “Cheap insurance is cheap for a reason,” says Pollitz, referring to both short-term and association health plans. “These plans are less expensive because they are offering you less protection.” […]

Under Obamacare, short-term plans could only be sold for a coverage period of 90 days. That seemed a reasonable amount of time to offer bare bones coverage for people who are in between jobs or in another short-term bind.

Under the new rules, a short-term policy can be issued for a limit of 364 days and insurers are allowed to extend those policies up to 36 months, or a total of three years. Three years is not exactly short term, according to many health care advocates. Over a period of time that long, chances are higher a healthy person who signed up for a minimal plan may encounter health issues that could potentially be excluded from coverage.

* Blue Cross of Minnesota also issued a warning about these short-term plans

It is expected that if these policies can last for a year or more, healthier individuals may choose to purchase short-term coverage for the lower premiums, leaving only those with high medical needs to purchase individual plans. This would cause premiums to skyrocket to cover anticipated costs for the smaller population remaining.

* May 25th press release…

State Senator Heather Steans (D-Chicago) advanced a measure through the Senate to protect consumers from a pending rollback to the Affordable Care Act.

House Bill 2624 would encourage individuals to enroll in comprehensive health insurance rather than remaining on a short-term plan. The measure would limit short-term coverage to 180 days within a year. The Obama Administration limited the time an individual could stay on a short-term plan in 2016. President Trump has proposed reversing this ruling and allowing individuals to stay on short-term, limited duration insurance plans for a year.

“President Trump wants to extend the length of time individuals can stay on a short-term health insurance plan, driving up the cost for everyone on the exchange,” Steans said. “These plans can also hurt consumers by not providing full medical coverage and leaving patients with high medical bills.”

Short-term, limited duration insurance plans are exempt from many of the Affordable Care Act’s mandates and often provide less coverage to consumers. House Bill 2624 would require short-term policies to disclose to consumers that the plan might not cover all medical bills.

“This legislation is about protecting consumers and the insurance exchange in Illinois,” Steans said. “It is clear that the Trump administration does not have consumers’ best interest at heart, so as a state we need to step up and protect patients from enrolling in plans that won’t cover their expenses.”

* Not everyone liked Steans’ bill. From one of Dan Proft’s papers

Short-term health plan legislation that was sent to Gov. Bruce Rauner more than a month ago should be vetoed to protect middle-income Illinoisans, the founder of an independent insurance brokerage firm said.

“House Bill 2624 will be devastating to Illinois consumers who do not qualify for Affordable Care Act subsidies,” C. Steven Tucker, Health Insurance Mentors founder and principal broker, told North Cook News. “These consumers have been forced to absorb premium increases of more than 200 percent in the last five years.”

* Gov. Rauner vetoed the bill over the weekend…

Today I veto House Bill 2624 from the 100th General Assembly, which restricts the scope and operation of short-term limited-duration health insurance plans (“STLDs”).

This legislation would impose numerous restrictions on these plans, which have historically been utilized to cover individuals who may be experiencing a gap in longer term coverage options, including strict maximum time frames and prohibitions on renewal.

I recognize concerns that certain STLDs have not always been clear in their terms and coverage, but ultimately broad restrictions such as those contained in House Bill 2624 will reduce consumer plan choice as well as the availability of STLD options in Illinois. The scope of STLDs has recently been debated at the federal level, and we should look to be consistent with the regulatory structures of other states and the federal government, as further regulation will create barriers to Illinoisans’ access to the health care plans that best fit their needs.

- Posted by Rich Miller        

12 Comments
  1. - Texas Red - Monday, Aug 27, 18 @ 11:14 am:

    Let the consumer pick what is best - these STLD’s are an attractive option open to folks that may be between jobs. The ACA subsidy wit itis income threshold creates a market for these type of plan. …” most of the people who switch from marketplace plans to short-term insurance “will be relatively young or relatively healthy” and will have annual incomes above $48,000 for an individual or $98,000 for a family of four, making them ineligible for subsidies.

    https://www.nytimes.com/2018/08/01/us/politics/trump-short-term-health-insurance.html


  2. - The Bashful Raconteur - Monday, Aug 27, 18 @ 11:25 am:

    No doubt the Blues have nothing good to say about short-term plans, they are behind the legislation to stop them. Not because the plans are bad, it’s because the Blues won’t make $$ off them and could reduce numbers forced into their plans. They are the only “game-in-town” for many Illinoisans. The short-term plans actually provide low-cost insurance for the ever increasing folks who cannot afford the high premiums and don’t qualify for gov. subsidies. If one reads the federal rule language, one will see that safe-guards are built-in to ensure consumers understand the health insurance policy they are buying.


  3. - Da Big Bad Wolf - Monday, Aug 27, 18 @ 11:27 am:

    ==sold on the premise that “junk insurance is better than nothing” for people who cannot afford comprehensive coverage.==

    It is worse than nothing because people pay for insurance that is basically worthless. People don’t find that out till they are in the hospital. The hospital doesn’t even take such patients, they usually are sent to Stroger hospital where the good people of Cook County pay for them to get better.


  4. - Northsider (the original) - Monday, Aug 27, 18 @ 11:30 am:

    Livin’ up to that ‘Governor Junk’ moniker.


  5. - NoGifts - Monday, Aug 27, 18 @ 11:40 am:

    You can get a devastating illness such as leukemia at any time. What happens when a person with a cheap plan gets this diagnosis? We’re right back where we started from.


  6. - Da Big Bad Wolf - Monday, Aug 27, 18 @ 11:52 am:

    My sister is an administrative nurse, and preACA she would ship people off to Stroger all the time. It was heartbreaking for her to do that. People would think that just because they had something like $10,000 insurance for the hospital they would be covered, but that is only one or two days at a hospital. The hospital wouldn’t even admit such patients.

    I also knew people who worked at Stroger. They said people were shipped to them as far away as Kentucky. I don’t know if that is still true today.


  7. - Keyrock - Monday, Aug 27, 18 @ 12:28 pm:

    Yet another easy campaign commercial for Pritzker’s team to make.
    Phony insurance from a phony governor.


  8. - Cook County Commoner - Monday, Aug 27, 18 @ 12:54 pm:

    If these STLDs are anything like some of pre-ACA catastrophic plans I have reviewed, run, don’t walk, run away from them.
    Before folks start commenting on Health coverage, they need to understand insurance pooling, adverse selection and the need for profit if we’re going to go down the private carrier road.
    Also, folks need to stop this “give folks choice” red herring. Choice is a good thing with most consumer goods and services. But insurance contracts are way over the head of most folks. And when you add in an agent puffing the product, people are going to get hurt.


  9. - illinifan - Monday, Aug 27, 18 @ 2:35 pm:

    This return to the good old days is awful. There are tons of Medicaid applications filed for persons who are “insured” as the person eventually finds out the money they paid for premiums was a total waste and their illnesses, or pregnancy are not covered. Often the person said the insurance sales person never informed them of what the policy covered, or used language they did not understand, so they thought they were buying good coverage.


  10. - Da Big Bad Wolf - Monday, Aug 27, 18 @ 4:00 pm:

    ==Not because the plans are bad, it’s because the Blues won’t make $$.==

    No. The plans are bad.

    My brother has glaucoma and he had one of these short term plans. The doctor recommended surgery for his eyes. His insurance only approved one of the surgeries because “you only need one eye”.


  11. - Mike K - Monday, Aug 27, 18 @ 5:23 pm:

    This could be an interesting veto-session bill. Rep. Laura Fine worked hard to cobble together 65 House votes for her insurance consumer protection initiative. She’ll need to work even harder to get a veto override, but in a post-Rauner world, and with a popular House member moving up to the Senate…who knows?


  12. - Yu2 - Monday, Aug 27, 18 @ 6:54 pm:

    Of course


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