Is short-term limited term insurance a viable option in a broken system?
As mentioned in Part 1, short-term limited term insurance (STLDI) is “medical insurance provided under a contract with the issuing company, with an expiration date specified in the contract to allow for renewal or extension. “Thing. STLDI provides gap protection in the event of a health insurance coverage transition (e.g., job loss or job change).
Starting in 2016, federal regulations updated STLDI coverage from 12 months to 3 months to 3 years.was suggested Biden regulations Although once again reducing the time period (4 months), the question remains whether STLDI is a viable long-term alternative to ACA coverage or whether the decision should be left to consumers.
Even the regulatory body is not transparent. In May 2022, the General Accounting Office (GAO) report These three conclusions:
- Data limitations impede understanding of the role played by short-term planning [including] During the COVID-19 pandemic.
- Views varied widely about the value of short-term plans to consumers and compared to individual health insurance coverage.
- Additional data would improve our understanding of the role of short-term plans and help states oversee insurers’ market actions.
The National Association of Insurance Commissioners (NAIC) is also confused. Focus on it: “State insurance regulators know little about the size of the STDLI market because insurance plans are typically not required to report enrollment data.”
Some of the three industry issues discussed in Part 1 are contradictory.
- Affordable price. STLDI premiums can be 54 to 91 percent lower than ACA-compliant marketplace plans (GAO).
- access. Affordability supports access to STLDI benefits, including mental health, substance abuse, and prescription drugs in most states (GAO).
- reliability. STLDI claim authorization is equivalent to Marketplace plans (NAIC STLDI Market Behavior Scorecard).
GAO notes the contrasts in each. Low STLDI premiums may “not reflect the full cost to consumers,” with one study showing a $24,000 difference in the cost of heart attack treatment between STLDI and ACA plans. There is. Furthermore, the same data that showed that most states offer his STLDI plans with more comprehensive benefits also shows that they only offer a small portion of the total plans. And while claim approval may be comparable, STLDI coverage requires underwriting, while ACA plans cover all pre-existing conditions.
Insurance and its core functions
A core function of health insurance is to protect consumers from unexpected and expensive medical costs. Conversely, the core function of public, for-profit insurance companies such as UnitedHealthcare, CVS Health/Aetna, and Cigna is to maximize value and generate returns for their shareholders and owners. These two functions are often in conflict, and the design of U.S. health care policy and insurance coverage before and after the Affordable Care Act is part of the problem.
In 2008, Innovator’s prescription He highlighted the combination of health savings accounts (HSAs) and high-deductible health plans (HDHPs) as “one of the most important reforms we need to make in health care.” This structure he “separates” comprehensive medical insurance into two parts. contribution (pot of money) Payment of medical expenses defined as pre-deductible medical care. advantage To pay for additional costs and care.
The theory was that upfront spending by individuals would reduce unnecessary health care utilization and promote prevention. Although HSA-HDHP has become more popular, it has not been able to stem the rise in medical costs. Additionally, consumer costs are increasing, leading to delayed treatment and medical debt.
“If the cost burden is large enough to significantly impact health care costs, it will impede the primary function of health insurance, which is to protect people from the risk of having to pay high medical costs.”
So take a look at the authors of the latest proposals for health care reform. We’ve got you covered: Restarting America’s health care. Citing “deep-seated corruption in U.S. health insurance,” Rylan Einav and Amy Finkelstein argue for free basic coverage with automatic enrollment for all Americans and consumer-customized payments. We are proposing a combination of individual voluntary insurance. This is a twist on the defined contribution plan. model.
Which of these models is closer, an STLDI plan or a Marketplace plan? A short-term plan does not include free basic services, but when combined with an indemnity (cash) plan, it provides a combination of defined benefits and defined contributions. Masu. Most likely, the consumer is a healthy person with no pre-existing conditions, and he rarely needs EHB until he needs it. Marketplace plans also don’t offer free basic coverage, but they bring you closer to your needed EHB and free preventive services, and they offer comprehensive defined benefits that are more affordable than pre-ACA health care. Masu.
Interesting gaps remain in both coverage types. STLDI plans are not eligible for HSA, nor are many Marketplace HDHPs that do not meet MOOP requirements.
Options remain important. As the GAO notes, “If a relatively healthy individual chooses a short-term plan over his PPACA-compliant plan, the PPACA-compliant plan may have higher premiums and likely higher federal subsidies.” there is.”
Depending on whether your STLDI period is 3 years or 3 months, your current registration level may or may not allow you to enter the marketplace. However, there are two other factors that can be considered. Ending expanded subsidies and mandating free preventive care for marketplace plans. Congress must renew these subsidies to continue beyond 2025, and the 5th Circuit Court of Appeals reversed a district court opinion currently on hold to preserve some free preventive care mandates. There must be.Oral argument start Within one month (March 4th).
Beyond federal regulations, states continue to play a role in filling gaps and making insurance more affordable. For example, the state of Idaho offers her STLDI option with enhanced coverage that meets mandatory health benefit benchmarks. Since enactment, overall STLDI enrollment has increased by nearly 20% (GAO).
The bigger issue is that this golden age of health care still requires a golden age of coverage that protects the health of both consumers and markets.
Laura Beerman is a HealthLeaders contributor.
