Short-term health plans leave patients holding the bag at the worst possible time
Millions of us make the same tradeoff every month: we pay for health insurance — often at considerable cost — with the understanding that if the worst happens, we’ll be covered.
But now, a product that deceptively markets itself as health insurance is becoming increasingly popular. Anyone who cares about their health and financial wellness needs to be on guard — especially right now.
So-called “short-term” health plans were once a niche product, intended to cover people for just a few months while in between jobs. But in 2018, the Trump administration changed federal rules to make it easier for the insurance industry to sell these products, which aren’t subject to the same standards as typical health insurance and don’t provide the same coverage. Today, insurers can sell “short-term” plans that offer coverage for up to three years.
A U.S. House committee published a recent investigative report that found short-term insurers often rescind coverage when patients get sick, refuse to cover even the most basic forms of medical care and discriminate against patients with pre-existing conditions like cancer.
As of last year, the committee found that at least 3 million Americans are covered by these plans. That number could rise. According to a study by Families USA, an estimated 5.4 million laid-off workers became uninsured due to lob josses from February through May. Many of them are shopping for private health insurance and it’s crucial they understand short-term plans may not provide the coverage they expect.
Because these plans don’t cover much, they’re very profitable for insurers, according to the committee report. And because of that, the committee found, insurers can pay big commissions to brokers who might mislead consumers about what they do and don’t cover.
Earlier this year, The Leukemia & Lymphoma Society, commissioned an actuarial firm to study these plans. We wanted to know what happens if someone is newly diagnosed with a serious condition such as a heart attack, diabetes, or cancer while covered by one of these plans. We found that patients covered by short-term plans that are newly diagnosed with these conditions would likely owe 50 percent to 500 percent more in out-of-pocket costs than patients covered by typical health insurance. In many cases, the difference amounts to tens of thousands of dollars.
If that sounds like a bad deal to you, you’re right. These plans don’t resemble modern health insurance, which is why critics often call them “junk insurance.”
Fortunately, there are steps consumers can take to protect themselves. First, they should demand, in writing, the details of any insurance plan they’re considering. Look closely at the fine print. A short-term plan might have a disclaimer stating it “does not comply with the Affordable Care Act” or “might not provide minimum essential benefits.” Phrases like those should be red flags that this isn’t typical insurance.
Another hint: the overwhelming majority of short-term plans don’t cover prescription drugs. If the plan says it doesn’t cover prescription drugs, or its “coverage” is simply a discount card, it’s not adequate insurance.
But even knowledgeable consumers can fall victim to these plans, which is why we’re pressing lawmakers in Washington and state capitals to protect consumers from these products.
Short-term plans leave patients vulnerable at the exact moment they need support. In some cases, sick patients risk falling into debilitating debt as a result of these plans. Even worse, these plans can prevent them from accessing life-saving treatment. Lawmakers should stop the expansion of these dangerous plans so patients can avoid worrying about their coverage and instead focus on what matters most: getting healthy.
Gwen Nichols, M.D., is the chief medical officer of The Leukemia & Lymphoma Society.