A new Kaiser Family Foundation analysis of short-term, limited duration (STLD) health plans for sale through two major national online brokers finds big gaps in the benefits they offer.
Through an executive order and proposed new regulations, the Trump Administration is seeking to encourage broader use of short-term, limited duration health plans as a cheaper alternative to individual market plans that comply with the Affordable Care Act’s requirements. Repeal of the individual mandate penalty – which currently applies to people buying short-term plans – is also expected to boost enrollment starting next year.
The analysis examines 24 distinct short-term insurance products currently marketed in 45 states and the District of Columbia through eHealth or Agile Health Insurance. It finds:
- 43 percent do not cover mental health services;
- 62 percent do not cover substance abuse treatment;
- 71 percent do not cover outpatient prescription drugs; and
- None of the plans cover maternity care.
In seven states – Alaska, California, Hawaii, Maryland, Montana, New Mexico and Utah – none of the available short-term plans cover any of these four benefit categories. When short-term plans do cover mental health, substance abuse, and prescription drugs, the analysis finds they almost always include meaningful limitations and exclusions that would not be permitted in ACA-compliant plans.
Short-term plans traditionally have been marketed to people who experience temporary gaps in coverage. Unlike ACA-compliant plans, short-term policies can deny or restrict coverage to people with pre-existing conditions and are not required to cover essential health benefits. They also can include dollar caps on coverage and higher deductibles that would not be allowed under ACA-compliant individual market and group health plans.
The analysis confirms that these short-term plans often have premiums much lower than ACA coverage – often 20 percent or less than the lowest-cost bronze plan available through the ACA marketplace in the same location.
To the extent that healthy individuals opt for cheaper short-term policies instead of ACA-compliant plans, adverse selection would raise the cost of coverage for people with health conditions who remain in the ACA-compliant market. Tax credits would offset those higher premiums for low- to moderate-income people who qualify for them, though middle-income families not eligible for subsidies would likely face premium increases.
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