NAIC Report: With certain exceptions, non-ACA-compliant plans pretty much suck.
Christina Lechner Goe has written up a detailed explainer going over the various types of NON-ACA-Compliant healthcare policies available and how each of them impacts the individual and small group markets. The report was commissionerd by consumer representatives of the National Association of Insurance Commissioners (NAIC):
The purpose of this analysis is to provide additional background research and information on the risks posed by alternative coverage options that do not comply with all or most of the Affordable Care Act’s (ACA’s) consumer protections. These alternative coverage options include association health plans, short-term plans, health care sharing ministries, and transitional plans, among others. Some of these plans have proliferated in recent years, and federal regulators have proposed to expand access to this type of coverage. Each of the plans discussed in this report have or will contribute to market segmentation and adverse selection against the traditional individual and small group markets. With the repeal of the individual mandate penalty in 2019, we are concerned that these trends will accelerate.
State insurance departments play a critical role in regulating these types of alternative coverage options. Doing so is increasingly important to promote stability in the individual and small group markets and in light of proposed federal-level policy changes to increase access to non-ACA-compliant plans.
To help inform the perspective of regulators, this report discusses historical data, trends, and the reasons that these alternative coverage options result in market segmentation. Although this analysis does not re ect extensive recommendations for state regulators, the NAIC consumer representatives have or will continue to make recommendations to address these concerns before various NAIC committees, working groups, and task forces. We continue to urge state insurance regulators and the NAIC to regulate and limit the risk of market segmentation caused by non-ACA-compliant plans and to promote market stability.
It's an excellent primer, highly recommended for understanding all 4 types of policies. I'm gonna cut to the chase, however:
Most insurance experts, including AHIP and the American Academy of Actuaries, agree that the proliferation of the types of health coverage discussed in this report will lead to risk pool segmentation that will damage the single risk pools in the individual and small group health insurance markets. The extent of the damage will undoubtedly vary from state to state, depending on many factors, including how those states regulate these types of products. The individual health insurance market appears to be more at risk than the small group market. If the individual health insurance market collapses, many individuals with pre-existing conditions who are not eligible for Medicaid, Medicare, or employer group health coverage could be faced with no viable option for health care financing that would ensure their access to necessary health care. If the minimum protections established by the ACA continue to be eroded, a consumer’s ability to access and pay for health care will again depend on what state they live in.
State regulators play an important role in ensuring that minimum federal standards are met and protecting the consumers in their state from fraud, scams, insolvency, and devastating financial loss. States can also take additional action to protect their consumers and markets and to mitigate the potential for market segmentation outlined above.