Short-term insurance policies likely to cause long-term problems

Short-term insurance policies likely to cause long-term problems
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The debate over short-term health insurance plans once again made headlines on Oct. 10, when the Trump administration’s Short-Term, Limited-Duration Insurance Final Rule withstood efforts by Senate Democrats to overturn.

The final rule increased the initial coverage period of short-term health insurance policies from three months to 364 days and allows these plans to be extended for an additional 36 months. In addition, these short-term plans are now being offered to small businesses that were struggling with increasingly high health-care costs.

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While short-term policies will prove to be more economically viable for millions of Americans, they do so by reducing certain of the benefits outlined in the Affordable Care Act (ACA), including the ACA’s expansion of the Mental Health Parity and Addiction Equity Act, which covers behavioral health treatments and services.

Furthermore, under the new rule, small businesses can legally exclude coverage for employee maternity care, prescription drugs, mental health and substance use disorder services, preventative and wellness services, chronic disease management and other “essential health benefits” that were required by the ACA.

It is completely understandable why a small business owner would offer these short-term policies. Costs for large corporations have stabilized, but small businesses continue to see healthcare costs skyrocket, even with the ACA in place.

Something must be done to address this, but in the midst of a nationwide opioid, mental health and mental illness epidemic, businesses should consider the short- and long-term ramifications of their policy choices. Similarly, individuals without access to employer-based health care have seen prices rise significantly, making short-term plans much more viable. As they consider their options, they must be aware of the potential shortfalls of short-term plans. 

2017 survey issued by the National Safety Council shows the widespread problem of substance use disorders in the workplace. The findings indicate that more than 70 percent of employers have been impacted by prescription drugs and 65 percent of business owners believe drug misuse to be a fireable offense.

We are already seeing an increase in patients being surprised that their new employer-based health care does not cover treatment for substance use disorders. Unfortunately, if patients cannot get the treatment they need due to a lack of coverage, they often end up in the emergency room or hospital, which ultimately costs significantly more for all parties.

Changes in the insurance industry are made regularly with the goal of finding a balance between controlling current costs and long-term sustainability. The National Institutes of Health released a study revealing how much money the health-care system saves through opioid use disorder treatment: for every $1 spent on the treatment of drug addiction, the overall system saves $12.

Additionally, the National Institute on Drug Abuse performed a California-based study in 2017 to determine the cost-effectiveness of opioid agonist treatment (OAT), using treatment data from 2006-2010. The results showed that immediate access to OAT costs $78,257 less than the observed standard of care. Using a hypothetical scenario based on the number of Californians who started treatment of opioid use disorder in 2014 and had immediate access to OAT, the total lifetime savings were calculated at $3.8 billion.

While these new short-term insurance options might provide a temporary reprieve from the burden of health-care costs, statistics tell us that skirting the issues of addiction and mental health will only cause greater problems down the road, in addition to significantly higher costs.

With short-term policies becoming a more accessible option, how do we move forward?

Our first focus must be on educating consumers and policy-makers. Many people, business owners included, bypass the fine details of insurance policies and understandably go straight to the cheapest option. With these new short-term policies, coverage for treatment could be inadvertently taken away from employees. Furthermore, since most people assume that any plan they are under is ACA-compliant, it is likely they would not find out their plan is “bare-bones” until it is too late.

For those of us working in the health-care industry, we need to continue to stress the need for thoughtful insurance policy. There are bigger matters at stake here. With opioid and other illicit drug use at record highs and a growing mental health epidemic that is resulting in suicide rates rising for the first time in years, we must promote and enact policies that reflect the current state of health in the United States. People need to understand that for every dollar they are saving in the short term, they could be losing $12 in the long run.

Scott Olson has a JD from Vanderbilt Law School and for three years served on the Vanderbilt Law School Board of Directors. Currently he is the CEO of Pathway Healthcare, which provides treatment for opioid and other substance abuse disorders utilizing results-based methods & medications in a very supportive out-patient environment.