Cheaper, stripped-down health plans could soon see a resurgence in Oklahoma, potentially reducing the number of uninsured while leaving policyholders with unexpected medical bills.
A pair of recent moves by the Trump administration and state lawmakers will allow consumers to buy short-term, limited-duration insurance plans for up to 36 months – an expansion six times longer than the current six-month limit.
These policies have traditionally been used as temporary or gap coverage – for example, if someone is between jobs — and can be purchased for a fraction of Affordable Care Act-compliant plans on the federal exchange.
But the plans come with a big caveat: They often lack key benefits, such as prescription, maternity and cancer coverage, that are mandated for plans on the exchange.
Additionally, the short-term plans are exempt from having to accept individuals with pre-existing conditions, another hallmark of the federal health-care law.
The move reflects a broader philosophical debate over the future of health care in the country and Oklahoma: Should consumers have more options to buy health insurance at different prices or should the government block plans that lack key benefits and consumer protections?
“It harkens back to the old days when the market was more of a wild west,” said Sara Collins, vice president of health-care coverage and access for the Commonwealth Fund, a Washington, D.C.-based group that supports universal health care. “It can be a very risky plan for people to buy compared to other insurance policies that might be more comprehensive.”
Supporters of the plans and rule change say they will give more people affordable insurance options, reducing the number of uninsured.
About 122,500 people across the country held these plans at the end of 2017, according to a report from the National Association of Insurance Commissioners. With the ability to hold the policies for up to a year and then renew for two more years, the federal government expects that number will jump by 600,000 this year and another million by 2021.
Oklahoma is now one of 26 states that have adjusted their state laws to match the new federal rule or already had no restrictions on their books.
There are no government estimates on how many Oklahomans are currently on the plans. But an Urban Institute analysis predicts that 4.3 million Americans will buy short-term plans because of the rule change, including about 70,000 Oklahomans, half of whom are uninsured.
The Politics of Health Care
The decision to expand the availability of the stripped-down, short-term plans comes as Oklahoma policymakers, including Gov. Kevin Stitt, say they plan to take the interim session to study Medicaid expansion ideas or shore up the insurance market. Oklahoma continues to boast one of the nation’s largest uninsured rates and highest premiums on the federal exchange.
The moves to expand short-term plans signal that Republicans are still looking to break away from the Affordable Care Act, passed in 2010. Democrats, meanwhile, continue to support the law.
After the Trump administration rules took effect in August, then-Oklahoma Insurance Commissioner John Doak called on Oklahoma lawmakers to bring the state laws, which restricted plans to six months and did not allow for extensions, to the new 36-month limit. The policy was similarly supported by now-Insurance Commissioner Glen Mulready, a fellow Republican.
Legislators responded by passing Senate Bill 993 on a 36-10 vote in the Senate and 72-22 in the House, with both votes largely along party lines.
During an, hour-long debate on the bill in the House, Rep. Forrest Bennett, D-Oklahoma City, called it a “cruel bill” and a backdoor way of allowing insurers to sell shoddy policies.
“People in my district are going to be the ones buying this product, and they are going to get hurt or sick and they are going to go the hospital and find out they don’t have that type of coverage,” he said. “This is affordable because it’s not quality health insurance.”
Rep. Lewis Moore, R-Arcadia, who was the bill’s sponsor, said short-term plans aren’t for everyone.
He said Oklahomans, especially those who don’t qualify for Affordable Care Act subsidies, deserve to have an option to get some type of coverage.
“The costs are beginning to get prohibitive for people to afford it,” he said during debate. “This is a stripped-down version of a health plan, and most of the people who take these are going to be younger, healthier people who can afford them … and we want to try to help them.”
What’s in the Plans
Cynthia Cox, director of a Kaiser Family Foundation program for the study of health reform and private insurance, said consumers should be aware that “you get what you pay for.”
Because Oklahoma’s new law takes effect Nov. 1, it is not clear how many plans will be offered, how they will be priced or what exactly will be in them.
A Kaiser Family Foundation review of short-term plans offered in Oklahoma City last year found 21 plans were offered through eHealth or Agile Health Insurance – two major online private-insurance marketplaces. Those plans could be bought for up to six months.
Among them, 57 percent offered mental health coverage, a third covered substance abuse treatment and prescription drugs, and none of the plans offered maternity benefits, the foundation’s review found.
The plans ranged in prices from $42.23 to $779.92 per month for a 40-year-old nonsmoker. Most plans cost well below the $377-per-month price for the lowest-cost plan on the federal exchange in Oklahoma for the 2019 plan year.
How Short-term Plans Stack UpThe average monthly premium for a short-term health plan is about one-third of the cost of a typical unsubsidized plan on the federal Affordable Care Act exchange. But a comparison of plans currently offered in Oklahoma shows many short-term plans offer fewer benefits than ACA-compliant policies.
Data: Oklahoma Watch analysis of three of best-selling short-term plans listed on ehealth.com (as of June 7, 2019) compared to the lowest cost ACA plan for a 40-year-old male nonsmoker in Oklahoma City.
|Plan Feature||Blue Cross and Blue Shield of Oklahoma Blue Advantage Bronze PPO (ACA Compliant)||Independence American Insurance Company (Six-month Plan)||Golden Rule Insurance Company Medical Value Select A (Six-month Plan)||Golden Rule Insurance Company Medical Plus Elite A (Six-month Plan)|
|Limit on total covered benefits||Unlimited||$2 million||$600,000||$600,000|
|Pre-existing condition protections||Yes||No||No||No|
|Mental Health and Substance Abuse Coverage||Yes||No||No||No|
|Outpatient Prescription Drugs Coverage||Yes||No||No||No|
|Pregnancy and Delivery Coverage||Yes||No||No||No|
Cox said the lowest-priced plans generally are in the category of “catastrophic coverage” that don’t cover key benefits. They usually have high deductibles or impose limitations or exclusions that would not be allowed in ACA-compliant plans.
Although these might make sense for some, Cox said consumers can easily have buyers’ remorse if an unexpected illness occurs and the consumer has to pay thousands of dollars out of pocket.
Cox suggested these plans could be confusing to many Americans because they typically include more caveats.
In one short-term plan, for example, Cox said she reviewed a brochure that included a picture of a young couple climbing a mountain.
“And then in the fine print in that same brochure, it said that injuries from mountain climbing is not covered,” she said. “So you really have to read that fine print.”
Unlike with ACA plans, insurers can reject those who apply for short-term plans, or make them pay higher rates, if they have a pre-existing condition.
In another study, Kaiser foundation researchers sent dummy applications to insurers in a number of states from a hypothetical patient who had been diagnosed as HIV-positive.
“They were denied every time,” Cox said.
Outside of the impact that these plans can have on an individual, health-policy experts are worried that the entire ACA marketplace could suffer if more consumers abandon the ACA market for a private short-term plan.
The federal government, in an analysis of the Trump administration rule extending the length of short-term plans, projected that premiums on the federal exchange could increase. But it also found 100,000 uninsured people across the country would gain coverage as a result.
“This (change) deals with one of the massive failures of Obamacare in that it ended a lot policies that people want,” said Jonathan Small, president of the Oklahoma Council of Public Affairs. “There’s no mandate that people buy these short-term plans, but this at least provides a real option for consumers.”