Washington, DC, PA - Pennsylvania Insurance Commissioner Jessica Altman today testified before the U.S. House Energy and Commerce Committee’s Subcommittee on Health on the potential harms that short-term, limited-duration insurance (STLDI) plans may cause for consumers and the health insurance market.
STLDI- provides temporary health coverage to individuals who have an unexpected gap in coverage or need health insurance coverage for a brief period. The plans generally have lower premiums but significant coverage limitations, as the protections of the Affordable Care Act (ACA) do not extend to STLDI.
Last year, the Trump Administration approved a rule to extend the duration and renewability of STLDI and has repeatedly described short-term plans as a viable alternative to purchasing comprehensive, major medical insurance, but has not extended the protections of the ACA to STLDI.
“We reject the notion that STLDI is an affordable alternative to comprehensive insurance that includes the benefits and protections of the ACA,” Altman testified. “Consumers may experience an upfront savings in premiums, but the affordability of STLDI plans will likely prove to be illusory: those who need health care will run up against exclusions and limitations on coverage that, while making the purchase price more affordable, will do so only as a trade-off for benefit coverage and provider access.”
Specifically, STLDI plans do not have to cover pre-existing conditions, which more than one in four Pennsylvanians are estimated to have, Altman said. STLDI plans also do not have to cover essential health benefits like substance use disorder treatment, which is especially concerning as the nation grapples with the opioid crisis, as well as maternity care, prescription drugs, mental health care, preventive care and other important benefits, and may limit coverage in other ways.
Altman told the committee that the Insurance Department has received numerous complaints from consumers whose STLDI plans failed to provide coverage for services that were excluded based on the fine print of those policies. In the past two years, the department has suspended the licenses of eight producers who misrepresented the coverage available to consumers who purchased STLDI.
“We have found that many consumers purchase STLDI without a full understanding of the product’s limitations,” Altman testified. “We continue to respond to consumer complaints about their lack of understanding of benefit limitations and take action when we learn of misleading information or misrepresentation. I have committed my department to doing all it can to make sure that these products are accurately and appropriately sold to Pennsylvanians but remain concerned by the volume of these practices in the market.”
Altman also testified that encouraging the proliferation of STLDI has the potential to increase premiums in and therefore destabilize our individual market.
In Pennsylvania, the market is stabilizing, Altman said. “Our final 2019 approved rates for the individual ACA market resulted in an aggregate statewide decrease of 2.3 percent. All insurers offering individual plans in 2018 continue to do so, and a new insurer entered our state. Governor Wolf’s aggressive support for the ACA and expanded Medicaid has pushed our uninsured rate to an all-time low of 5.5 percent,” she said.
Altman had previously expressed her concerns to the federal government last year, when the administration sought public comment before the federal rule expanding STLDI plans was finalized.
A copy of Commissioner Altman’s testimony’s is available on the Insurance Department website.
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