Covid-19 patients with short-term health plans—which typically have restrictions on coverage—could find themselves on the hook for tens of thousands of dollars.
The HHS has said the government will pay for coronavirus testing—but not treatment—of people with short-term plans. President Donald Trump has touted the plans as a more affordable alternative to Obamacare, even though they may lack the coverage protections of policies created under the Affordable Care Act.
Many short-term plans have limits on what they’ll pay for hospital coverage, as well as overall yearly maximums. The plans usually cost less than comprehensive plans, but people may not be aware of their limitations until they incur medical costs that aren’t covered.
The Kaiser Family Foundation estimates that hospitalization costs for people insured through a large employer private health plan could range from $9,763 to $20,292, and between $34,223 and $88,114 if they need ventilator treatments.
Since 2018, the Trump administration has bolstered the availability of short-term plans, first by expanding the length of time the plans can be in effect from three months to three years, and by promoting the plans to states as being eligible for federal subsidies. Federal subsidies have never been used for the plans, however.
According to data compiled by the National Association of Insurance Commissioners, about 87,000 people were covered by short-term plans at the end of 2018. That’s the most recent data available, and the number of people enrolled in such plans has likely gone up since the administration rules took effect.
Many health-care advocates are critical of short-term plans because they typically don’t cover pre-existing conditions or many of the benefits required under the ACA, chiefly maternity coverage, mental health and substance use, or many prescription drugs.
Who is ‘Uninsured?’
Part of the uncertainty stems from whether the short-term policy holders are considered “uninsured"—and thus eligible for government payment of the medical services they recieve. The HHS is using two separate funds to reimburse medical providers, one for testing and one for treatment.
Congress has appropriated a total of $2 billion for coronavirus testing for the uninsured.
The HHS is covering treatment of uninsured people using some of a $100 billion public health emergency fund, also authorized by Congress.
Confusion arose because the law that addresses Covid testing explicitly defines “uninsured” to include people with less-than-comprehensive plans, and the law that provides emergency funding doesn’t. Thus, the HHS has deemed that for testing, “Individuals with short-term limited duration insurance are considered uninsured Individuals,” an HHS spokeswoman confirmed to Bloomberg Law in an email.
“Individuals with short-term limited duration insurance are not considered uninsured individuals for the Public Health and Social Services Emergency Fund,” an HHS spokeswoman said.
The question first came up during a background briefing call with reporters when an administration official described the distinction and has led to multiple follow-ups.
“They’re saying they’re going to operate two different definitions, depending on whether its testing or treatment,” Christen Linke Young, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy, said in an interview. It’s “not at all clear how they’re going to operationalize the two definitions.”
Information posted by the Health Resources and Services Administration says that to participate in the reimbursement program, providers must attest that “They have verified that the patient does not have coverage such as individual, employer-sponsored, Medicare or Medicaid coverage, and no other payer will reimburse them for COVID-19 testing and/or care for that patient.”
“Their website only provides one definition, and it suggests it’s the treatment definition,” Linke Young said.
“How is anybody supposed to figure this out?” Karen Pollitz, a senior fellow at Kaiser, asked in an interview.
Problems With Short-Term Plans
“In most states short-term plans really don’t have to meet any minimum standards, and so they can pick and choose what kinds of items and services they cover,” Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, said in an interview.
Services covered vary widely, Corlette said. The plans may not cover particular drugs that may be used to treat Covid-19, laboratory services, or imaging, she said.
The plans also may limit hospital coverage to an amount that is inadequate to cover treatment, Corlette said. While some short-term plans may advertise broad networks of providers, payment rates to doctors may be low and the doctors may send “surprise” bills to patients, she said.
Moreover, since the plans typically don’t cover pre-existing conditions, insurance companies may challenge whether someone who bought a plan recently contracted Covid-19 before they bought the plan, Corlette said.
“It’s a little bit of a Wild West,” she said.
Short-term plans also may have annual and lifetime maximums, John Desser, senior vice president of government affairs with online health insurance broker eHealth Inc., said in an interview.
eHealth, based in Santa Clara, Calif., previously sold primarily individual market plans but shifted to selling mostly Medicare plans about three years ago. It still sells some Affordable Care Act plans and some short-term plans, Desser said.
“Those limitations are the reason why we don’t view short-term as a long-term substitute for major medical, because they do have limitations,” Desser said. These are stop-gap plans. We’d rather be selling ACA-qualified plans to people.”
A letter to congressional leaders April 29 from the Association for Community Affiliated Plans said short-term plan customers whose claims are rejected “will be left on the hook.”
The association urged that Congress clarify that the fund be used to cover expenses for treating all individuals who don’t have comprehensive coverage or to require that short-term plans cover Covid-19 treatment.
The association represents 75 nonprofit safety-net health plans that cover more than 20 million people through Medicaid, Medicare, ACA marketplaces, and other public programs.