If you have health insurance through your employer, you probably glossed over news stories this summer about the Trump administration’s new rules to expand the availability of “short-term” health insurance plans. These plans are used by a few million people. But they could negatively affect everyone who uses hospitals.
The “easier rules” extend the allowable length of these plans from 90 days to one year, with renewals extending the total coverage period to 36 months. Insurers offering these packages can choose not to cover pre-existing conditions, or can charge higher premiums for consumers who have chronic diseases.
To people who must buy their own insurance, like small business owners or contract workers, short-term insurance plans can seem attractive because they can be one-third cheaper than plans on state marketplaces created by the Affordable Care Act. Why the lower price? Insurers who sell these plans don’t have to offer coverage for all of the services that marketplace and employer-provided plans must offer. A recent Kaiser Family Foundation survey showed that 43 percent don’t cover mental health services, 71 percent don’t cover prescription drugs, and none cover maternity care. And unlike marketplace and employer plans, short-term plans can deny customers coverage based on pre-existing conditions.
Proponents of the plans tout their lower costs, while critics say they leave patients paying for insurance that actually covers little.
I, like many readers, am fortunate to have adequate health insurance through my employer. People who are self-employed must make some difficult insurance choices. If their income is high enough to disqualify them from marketplace subsidies for buying insurance, they can buy a marketplace plan with no subsidies, costing an average of $10,500 a year for a single person; buy a cheaper but skimpier short-term plan; or gamble and not buy any coverage at all.
Those of us with employment-related health insurance should care about policies affecting the few million people stuck between a rock and a hard place when buying health insurance because they use the same hospitals we do.
By law, hospitals must treat uninsured or underinsured patients. The cost of this “uncompensated care” reached $38.3 billion in 2016. That’s a huge drain on hospital resources. A recent report estimated that each uninsured patient costs a hospital $800 in uncompensated costs. People with short-term insurance function as uninsured when they seek treatment for conditions their policies don’t cover, such as childbirth, heart attack, or emergency psychiatric care.
That report also showed that competition among hospitals prevents them from passing uncompensated care costs on to their privately insured patients in the form of higher prices. Instead, uncompensated care erodes hospitals’ financial strength. As hospitals struggle financially, the quality of care they provide declines. Virginia Commonwealth University researchers found that hospitals in worse financial condition had significantly higher rates of adverse incidents for patients, such as bedsores or hospital-acquired infections. Another study found that patients undergoing major surgery faced significantly higher odds of suffering from medical errors when hospital margins decline over time.
If, like most Americans, you don’t use short-term health insurance, it may be tempting to ignore the debate about these plans. It may be even more tempting to think that they provide people with a helpful alternative to otherwise expensive health insurance. But the odds are good that you or someone in your family will need hospital care, meaning that a policy move in Washington that seems unrelated to you could matter to you more than you might think.
Vivian Ho, Ph.D., is a member of the Texas Medical Center Health Policy Institute’s executive advisory committee. She is also the chair in health economics at the Baker Institute for Public Policy, director of the Center for Health and Biosciences, and professor of economics, all at Rice University, and professor of medicine at Baylor College of Medicine.
I have to add to my previous comment. I am simply astounded that someone with your education and experience can make the claim that short-term medical plans are bad for everyone.
You cite the KFF Survey regarding the weaknesses of short-term medical plans. It would be helpful to read another article by Kaiser Family Foundation:
Key Facts about the Uninsured Population
This article provides a thorough examination of the uninsured population. The quote below is key to understanding this problem.
“Even under the ACA, many uninsured people cite the high cost of
insurance as the main reason they lack coverage. In 2016, 45% of uninsured
adults said that they remained uninsured because the cost of coverage was
too high.”
Short-term major medical plans help to alleviate this problem. Since they cost 40% to 70% less than ACA plans, they give people a low-cost alternative. Again, these are major medical plans that cover hospitalization. This benefits everyone.
You might disagree with the politics behind the expansion of STM plans, but to make the claim that STMs cause more people to be uninsured AND result in higher costs for everyone is simply wrong. The statistics in the KFF article make that clear.
Seems that either your political bias or lack of understanding regarding the uninsured population has caused you to make false conclusions.
Actually, the availability of short-term medical (STM) plans BENEFITS all of us. Think about it. Thousands of people make too much money to receive advanced premium tax credits. However, they can’t afford to pay for a typical ACA plan. Let’s take one of my clients – a 53 year-old dental hygienist earning $48,000/year. She can’t afford to pay $650/month for a high-deductible, anemic HMO plan. However, she can afford to pay $250/month for a short-term medical PPO plan. Would you rather she forgo health insurance? If that were the case, then she would be one of the uninsured patients that hospitals must treat. This low-cost alternative actually reduces the number of uninsured patients by providing an affordable alternative.
As an agent, I only recommend STM for people who have no pre-existing conditions. I inform them that they won’t have maternity coverage or mental health benefits. I also inform them of the annual maximums, ranging from $500K to $2M. They have the choice of plans with Rx coverage or not.
Bottom line is that most people make informed decisions and STM is a great option. They are no longer penalized (as of January 2019) for making this choice.
Sure, there are some inferior STM plans on the market. However, many STMs are true major medical plans. So, if a policyholder is hospitalized, then they will be covered. Again, your premise if flawed or you just don’t understand how beneficial STM can be to thousands of people with limited choices.
Sure, STMs don’t cover pre-existing conditions. I’m sure there are some unscrupulous agents who gloss over this fact. Just don’t equate people with STM as though they are uninsured due to pre-existing conditions. Like most agents, I would never sell an STM to anyone with pre-existing conditions. I’ve had people make informed choices. For example, I’ve had clients choose an STM even though they have a minor health condition, like hypothyroidism, that wouldn’t result in expensive treatment.
Yeah, it’s great that you have an employer-based plan. If you were self-employed and healthy (let’s say you earn $60,000 per year), would you opt for a $600/month HMO plan with a very narrow network and weak benefits OR would you pay $250/month for a PPO plan with some of the aforementioned limitations?
You also seem to equate the ACA (Obamacare) plans with employer-based plans. The truth is that most individual ACA plans are far inferior. They are very narrow HMO networks with high deductibles, high copays, and weak pharmacy benefits.
As a health insurance agent with 18 years experience, I take it very seriously when I advise clients. I would not want anyone to take unnecessary risks to save money. Many clients stick with ACA plans because of their health conditions. However, most healthy clients are open to cost-saving alternatives. Without question, STM is a viable alternative and keeps many people from going uninsured.
Uninformed articles on the subject abound. I’m sad to say your article only contributes to this.
“Choices, so many Choices,” they peddled this like a cheap suit. Once they got Fox News, the mouthpiece for the billionaires to repeat this enough times, they all believed it. In the meantime the rest of the media is not covering the facts. Americans are dying and it is very costly thanks to this long term barrage of propaganda!
Great article