Ky. reviewing how to regulate short-term health policies that aren't so short any more; health expert advises to read the fine print

Image: The National Council for Behavioral Health

A 43-year-old woman went on a search for a short-term health insurance plan in Louisville that would cost less than an Obamacare exchange plan and found one for $393 a month -- but then she read the policy's fine print.

“I started looking at the details,” Dania Palanker told Lisa Gillespie of WFPL. “They only covered $3,000 towards prescription drugs, but if I ended up needing an expensive drug, I’d end up hitting a max. They exclude certain pre-existing conditions, birth control, pregnancy coverage and mental health.”

She added: "Some hospital services aren’t covered, [like] if you’re admitted on a Friday or Saturday for a non-emergency. If you didn’t know to read through your insurance, to think that could become problematic.”

"In that situation, the policyholder would have to pay for the hospital visit," Gillespie reports.

She notes that Palanker doesn't really need health insurance and is actually an assistant research professor at Georgetown University’s Health Policy Institute, "but what she described is a situation many Kentuckians could find themselves in later this year if they buy a short-term, 'bridge' insurance policy."

Such plans are not new. Under an Obama-era rule they were limited to three months, but since the Trump administration changed the rule in August, these short-term, limited plans can now be sold for up to a year and can be renewed or extended for up to three years.

"A report by the federal government estimates there were fewer than 200,000 people with these plans last year, but that’s expected to increase by more than 600,000 by 2019," Gillespie reports.

Gillespie reports that a host of influences will make these short-term, limited plans more attractive to Kentuckians, including the removal of the individual mandate in 2019, which currently requires everyone to have health insurance or pay a tax penalty, and the likelihood that these plans will be more affordable to those who made too much money to qualify for any financial help on the Obamacare exchanges.

Add to that, Gillespie writes that these plans will be far more lucrative for insurance brokers to push because they will get a "healthy commission" for selling them, especially since the brokers who still sell Obamacare plans now get little to no commission, compared to when it was first rolled out.

Cody Michael, director of client and broker services at brokerage firm Independent Health Agents, told Gillespie that Obamacare exchange market insurers may get between $0 to $20 a month for each enrolled person, whereas short-term insurers pay up to 30 percent of whatever the plan costs. So for example, 30 percent of that $393 short-term plan found in Louisville would add up to about $118 a month for the broker.

Joel Thompson, an insurance broker in Eastern Kentucky, who tells his clients that these plans have "more holes than Swill cheese,"told Gillespie that he worries these plans will draw people away from the Obamacare marketplace, leaving only the sickest and therefore most expensive policyholders on these plans, which could "jack up prices up even more," Gillespie writes.

“That’s the real danger of the short-term plans, that they will wreck the [Obamacare] market from within, and it will fulfill the prediction that President Trump made of the ACA imploding,” Thompson told Gillespie.

Sheila Schuster, a health care advocate in Kentucky, told Gillespie that she worries that consumers considering short-term plans won’t understand what they’re buying. This concern is supported by a 2014 Kaiser Family Foundation survey that found of the nearly 1,300 adults surveyed about health insurance terms and concepts, nearly one-third of them gave correct answers to four or fewer of the 10 questions asked on the survey.

Kaiser Family Foundation chart; click on it to view a slightly larger version

Palanker, of the Georgetown health policy institute, recommended that consumers consider the entire cost of a plan, and what they’d have to pay in the event a short-term health plan didn't pick up part of a medical bill.

States can decide if they will allow these plans to be sold for year-long periods and a spokeswoman for the Kentucky Department of Insurance, Susan West, told Gillespie that the state is reviewing the new policy. “If necessary [we’ll] promulgate a regulation or recommend legislation if the Department determines changes to the federal regulatory requirements are necessary to protect Kentucky consumers,” West said.

"States are also allowed to include a “renewability guarantee” in short-term plans, which would cost a percentage of a monthly premium and protect consumers from premium increases or coverage denials should they fall ill," Gillespie writes.