Report: Short-term health plans risk leaving patients uncovered

Alternative insurance products are widely marketed — ‘and they don’t have to cover anything, really,’ says report's author

Close-up of American Dollar banknotes with stethoscope
Short-term insurance plans may leave patients who purchase them uncovered, a new report says. (Photo by Getty Images)

Boosted by the Trump administration in the last year, short-term health insurance plans that have been proliferating in Wisconsin could leave patients without the coverage they need and fall far short of the guarantees provided under the Affordable Care Act, according to a new report.

The report, Don’t Get Caught Short, was released Wednesday by the Madison-based nonprofit Kids Forward. It was written by William Parke-Sutherland, the organization’s health policy engagement coordinator, and Hayley Young.

Short-term insurance plans provide health coverage for less than a year, typically provide limited benefits and coverage levels, and can exclude coverage for preexisting conditions.

President Barack Obama embraces Secretary of Health and Human Services Kathleen Sebelius (left) and House Speaker Nancy Pelosi after signing the Patient Protection and Affordable Care Act, in the East Room of the White House, March 23, 2010.
President Barack Obama embraces Secretary of Health and Human Services Kathleen Sebelius (left) and House Speaker Nancy Pelosi after signing the Patient Protection and Affordable Care Act (photo courtesy of the Barack Obama Presidential library)

The Affordable Care Act, which was signed into law by President Barack Obama in 2010, mandated comprehensive medical coverage and barred insurers from discriminating against people with preexisting medical conditions. It limited short-term plans to less than three months.

In the last year, however, the Trump administration has reduced regulation of short-term plans, including extending them up to 364 days and allowing them to be renewed. In response, the insurance industry has stepped up marketing for such plans across the country, including in Wisconsin.

“The intent of the ACA was to regulate these plans so short-term plans were a bridge between comprehensive health care coverage [plans], not a substitute for them,” Parke-Sutherland told the Wisconsin Examiner.

“When you have a plan that’s available for almost a year and can be renewed, you’re really starting to look at substituting. And they don’t have to cover anything, really.”

That message is especially important now, Parke-Sutherland said, because the end of the current open enrollment period for the ACA is fast approaching, with a deadline of Sunday, Dec. 15. 

“Short-term plans are not a viable alternative to ACA coverage,” the report states. “They provide less coverage, little to no consumer protections, and likely have higher out-of-pocket costs — especially for those who qualify for discounts through Healthcare.gov” — the internet portal where people in need of insurance can sign up for coverage under the Affordable Care Act.

The report says 8 in 10 Wisconsinites who buy insurance through the ACA marketplace are likely to be eligible for discounts based on income, getting better coverage than offered by a short-term plan.

Don’t Get Caught Short examined short-term plans offered by eight carriers in Wisconsin, drawing on information filed with the state Office of the Commissioner of Insurance. The data for the report was collected in September.

Parke-Sutherland said that from the information provided in state records, “there’s no easy way to tell exactly how many companies” are in the short-term market. His casual reviews of the state’s records have since turned up additional carriers and plans beyond those listed in the report.

Data on how many people have purchased short-term plans in the state also isn’t readily available, he said.

Of the eight plans examined for the Kids Forward report, the authors found that none includes coverage for pre-existing conditions; all include a lifetime cap on coverage; and only one offers coverage for pregnancy, childbirth or maternity care.

Half of the plans had no mental health coverage. Half also had either no coverage or limited coverage for substance abuse treatment.

“These limitations effectively exclude many people seeking health coverage,” the report states.

A report from the federal Centers for Medicare & Medicaid Services has stated that allowing insurance policies to discriminate against people with preexisting conditions could deny health coverage to one in two Americans. Citing that report, the Kids Forward analysis states short-term plans “could potentially leave gaps in coverage for half the population.”

“Because of the very limited coverage for mental health care, maternity care, prescription drugs and outpatient medications, calling short-term plans ‘insurance” is really a misnomer,’” the Kids Forward report states. “They too often fail to cover basic health care needs.”

The report lists the eight firms included in the study but doesn’t include detailed comparisons of their policies. Only one of the eight, Wisconsin Physicians Service Insurance Corp., is based in Wisconsin. The firm does business as WPS Health Solutions.

Responding to a request for comment on the report’s conclusions, DeAnne Boegli, WPS director of communications, emailed a statement to the Wisconsin Examiner:

“The short-term plan is not designed to be an alternative to ACA, rather it is designed to fill a gap in coverage for a shorter-time period. As designed, these plans are offered at a lower cost than traditional longer-term plans. Short-term plans do have some restrictions (which allow for the lower cost), but depending on a person’s situation they can be a solid, less expensive alternative. We work with our customers to select the best option for their current short-term needs. Providing choice is our top priority.”

Although the Kids Forward report notes that some states have banned short-term plans, it stops short of recommending that course of action. Rather, said Parke-Sutherland, the report is presented in a spirit of “buyer beware.”

“Companies often market their short-term plans as cost-saving alternatives to ACA coverage; however, in reality, these plans do not meet minimum ACA standards, frequently fail to meet basic health needs, and can leave consumers who thought they were covered with many thousands of dollars in unpaid medical bills,” the report states.

“The main point of this report is that these plans are not comprehensive health insurance,” Parke-Sutherland said. “These plans are not required to cover the minimum essential health benefits.”

The poor quality of short-term plans is also relevant because of the possibility that a lawsuit now underway could strike down the ACA, he added.

In that event, “These kinds of plans to some degree will become a bigger issue, because there won’t be any federal law requiring insurance plans to cover essential health plans or cover people with preexisting conditions or help make health insurance more affordable to people,” Parke-Sutherland said.

Updated: This story has been updated to remove a paragraph describing short-term insurance plan coverage of emergency room services.
The change was made after Kids Forward removed from its report the passage that was the source for that paragraph.
Kids Forward sent the following statement to the Wisconsin Examiner about its editorial change to the report:
“Upon further review, we have decided to remove mention of emergency services in our report. Much of the coverage exceptions to which we referred relate to additional costs, which can also apply (though typically with less cost-sharing) for emergency room benefits offered by comprehensive insurance regulated by the ACA.”
Erik Gunn
Senior Reporter Erik Gunn reports and writes on work and the economy, along with related subjects, for the Wisconsin Examiner. He spent 24 years as a freelance writer for Milwaukee Magazine, Isthmus, The Progressive, BNA Inc., and other publications, winning awards for investigative reporting, feature writing, beat coverage, business writing, and commentary. An East Coast native, he previously covered labor for The Milwaukee Journal after reporting for newspapers in upstate New York and northern Illinois. He's a graduate of Beloit College (English Comp.) and the Columbia School of Journalism. Off hours he is the Examiner's resident Springsteen and Jackson Browne fanboy and model railroad nerd.