Short-term health plans are a threat, not a victory, for sick patients

Your money or your life. For a robber, it’s a threat. For supporters of junk insurance, asking Americans to waste their money or risk their life counts as a “victory [for] sick patients.” At least that was the sentiment expressed by Michael F. Cannon in his recent op-ed “In a win for consumers, a court ruling affirms the legality of short-term health insurance plans” (The Hill, July 24). Cannon cheers a court decision that upholds a Trump administration regulatory loophole that seeks to eviscerate the Affordable Care Act through the proliferation of junk insurance.

For more than two years, ACAP has been sounding the alarm about junk health insurance — “short-term, limited-duration” insurance plans. These STLDI plans were originally intended to cover temporary gaps in coverage of up to 90 days. Then the Trump administration changed the regulatory definition of “short-term” from 90 days to 364 days—making short-term insurance a lower-cost alternative to plans available under the Affordable Care Act.

What Cannon’s op-ed conspicuously omits is that junk insurance rarely meets consumers’ actual needs, as its lower cost masks problems that can lead to large, unexpected bills.

The Affordable Care Act requires insurance plans to cover pre-existing conditions. Junk insurance plans don’t cover them. 

The Affordable Care Act prohibits “rescissions,” where health insurers comb through a member’s paperwork to deny coverage after a member has needed care. Junk insurers can and do take away health coverage after the fact.

The Affordable Care Act prohibits lifetime caps on health care expenditures. Junk insurance features lifetime caps as low as $250,000 and deductibles as high as $25,000.

Junk insurance plans are rife with misleading marketing. One issuer recently introduced a product that does cover some pre-existing conditions—but with a maximum coverage limit for pre-existing condition claims of $25,000—which is less than the average cost of a three-day hospital stay.

The rot of this misleading marketing extends through Cannon’s op-ed, in which he would have you believe that Jeanne Balvin, a resident of Arizona suffering from diverticulitis, was stripped of coverage by the Obama administration’s three-month limitation on STLDI plans.

The facts are these. Balvin was hospitalized for diverticulitis, which her short-term UnitedHealthcare plan covered. She renewed her plan but when she returned to the hospital with an abdominal infection, United denied coverage, cited her diverticulitis as a pre-existing condition, and cancelled her plan.

No federal rule forces health plans to deny coverage for pre-existing conditions or to retroactively cancel policies. Both are conscious choices made by UnitedHealthcare, not actions dictated by federal rulemaking. The Consumer Reports article Cannon cites describes Balvin’s disillusion—not her satisfaction—with these junk insurance products.

The op-ed claims that ACAP has sought relief in the courts because its plans “must be afraid of a little honest competition” from STLDI plans. The problem isn’t honest competition, it’s dishonest competition. Competing against plans that mislead their customers, discriminate on the basis of pre-existing conditions and pay out comparatively little in terms of claims is no competition. It’s why 335 of 340 health care groups who commented on the administration’s rule expanding junk insurance opposed the rule: Insurers know that it’s fool’s gold. Doctors and hospitals know they won’t get paid for services they provide. And consumers know that if they get sick, they’ll be left with a pile of unpaid bills.

Banning junk insurance isn’t “Stripping coverage from the sick” any more than banning snake oil is “stripping medicine from the sick.” At least the snake oil salesman has the decency to leave town after cheating the townspeople. By contrast, junk insurance salesmen just double down and claim they are providing consumers with “a choice.”

But Cannon is right about one thing: I lead a trade association of not-for-profit health insurers whose members have forsworn the abuses that junk insurance plans make routine and whose members won’t rescind coverage from sick patients.

So don’t take my word for it. Ask the Balvins.

Margaret A. Murray is CEO of the Association for Community Affiliated Plans.