Good News! California & Illinois make major progress towards nipping #ShortAssPlans in the bud

2018 MIDTERM ELECTION

Time: D H M S

This evening brought three major pieces of ACA-related news out of three different states:

First, in California, the State Senate passed SB-910, which wouldn't just limit short-term plans, but would outright prohibit them altogether. To my knowledge, CA would be the only state* where STPs wouldn't be allowed at all:

(*Correction: It turns out that New York, New Jersey and Massachusetts also ban Short-Term Plans as well, although according to Dania Palanker of the Center on Health Insurance Reforms at Georgetown University, California would be the first state to explicitly outlaw short-term plans as opposed to simply stating that all policies have to meet certain standards.)

SACRAMENTO – Today, the State Senate approved passage of Senate Bill 910, which prohibits the sale of short term limited duration health insurance in California.

Authored by Senator Ed Hernandez, O.D. (D-West Covina) and approved by bipartisan a vote of 27-10, SB 910 was introduced in response to the Trump Administration’s recent proposed regulations to expand short term limited duration coverage to less than 12 months.

“California will not allow the federal government to sabotage and destabilize our health care system. We must protect patients from this confusing and misleading false sense of coverage,” said Senator Hernandez, chair of the Senate Health Committee. “SB 910 would prevent junk insurance from being sold in our state. Let’s not go back to the days before the Affordable Care Act.”

This bill was introduced to make clear short term insurance is not allowed in California contrary to Trump Administration’s recent proposed regulations to expand short term limited duration coverage to less than 12 months. These policies not only undermine California’s progress under the ACA, but also imperil the financial stability of anyone who buys them.

These short-term plans do not have to cover essential health benefits, like cancer treatment, substance use treatment, or maternity care. Additionally, these plans can deny coverage altogether for those with pre-existing conditions.

Prohibiting junk insurance in California will ensure that we keep our Affordable Care Act protections so that patients don’t go into debt from their care or are denied coverage completely.

An issue brief released by the Urban Institute in March 2018 indicates that average individual market premiums would increase approximately 18% in 2019 in the states that do not prohibit or limit these plans.

SB-910 still has to pass the CA Assembly and would then have to be signed into law by Gov. Jerry Brown. I'm going to operate on the assumption that the former is a given and the latter is likely, but I'm not going to take that as a given.

Meanwhile, in Illinois, it sounds like a similar bill has made it out of the state Senate Committee and is going to be up for a full state Senate vote:

Exciting news: SA 3 to restrict short-term plans in IL passed the state Senate’s Insurance Committee tonight. On to the full Senate! Consumers are counting on you, @ILSenDems @ILSenateGOP #StopJunkInsurance https://t.co/h51eTh9EVP

— Claire McAndrew (@claire_mcandrew) May 23, 2018

I'm not positive, but I believe this is the Illinois Senate Amendment referred to. From what I can tell, unlike the California version (which wipes out STPs altogether) or several other states (which limit STPs to 3 months at a time), the Illinois version appears to allow them to last up to 6 months. They still wouldn't be renewable for a full year, however, which is the other critical point when it comes to curtailing this type of junk plan:

(a) This Act applies to health insurance issuers that offer short-term, limited-duration health insurance coverage to individuals in this State and to short-term, limited-duration health insurance coverage that is delivered or issued for delivery in this State, including coverage issued outside of this State that covers individuals in this State.

 (b) A short-term, limited-duration health insurance coverage policy may not be issued or delivered to any person residing in this State unless the policy, when delivered or issued for delivery in this State, complies with the provisions of this Act.

(c) Any short-term, limited-duration health insurance coverage policy that is delivered or issued for delivery in this State must have an expiration date in the policy that is less than 181 days after the effective date and shall not be renewable or extendable within a period of 365 days after the individual's coverage under the policy ends, either at the option of the issuer or the individual. Renewal of a short-term, limited-duration health insurance coverage policy includes the issuance of a new short-term, limited-duration health insurance policy by an issuer to a policyholder within 60 days after the expiration of a policy previously issued by the issuer to the policyholder.

(d) Any short-term, limited-duration health insurance coverage policy that is delivered or issued for delivery in this State may not be rescinded before the expiration date in the policy, except in cases of nonpayment of premiums, fraud, or as provided in subsection (e).

(e) Any short-term, limited-duration health insurance coverage policy that is delivered or issued for delivery in this State shall contain an option for an individual to cancel coverage after any 30-day interval during the term of the plan.

In addition to the critically important time window restrictions, the Illinois bill also helps make sure that anyone who does sign up for a STP in Illinois fully understands what they're getting themselves into:

Section 15. Disclosure requirements.

(a) A health insurance issuer that offers short-term, limited-duration health insurance coverage to be delivered or issued for delivery in this State shall, in addition to all other documents required, including, but not limited to, the policy, the certificate, the membership booklet, and a description of appeal and external review rights, deliver an outline of coverage to an applicant for or an enrollee in short-term, limited-duration health insurance coverage delivered or issued for delivery in this State.

(b) Any short-term, limited-duration health insurance coverage policy that is delivered or issued for delivery in the State shall display prominently in the policy, any application, sales, and marketing materials provided in connection with enrollment in such coverage, and the outline of coverage for such coverage, in at least 14-point, bold type, the following:

"NOTICE: THE SHORT-TERM, LIMITED-DURATION INSURANCE BENEFITS UNDER THIS COVERAGE DO NOT MEET ALL FEDERAL REQUIREMENTS TO QUALIFY AS "MINIMUM ESSENTIAL COVERAGE" FOR HEALTH INSURANCE UNDER THE AFFORDABLE CARE ACT. THIS PLAN OF COVERAGE DOES NOT INCLUDE ALL ESSENTIAL HEALTH BENEFITS AS REQUIRED BY THE AFFORDABLE CARE ACT. PREEXISTING CONDITIONS ARE NOT COVERED UNDER THIS PLAN OF COVERAGE. BE SURE TO CHECK YOUR POLICY CAREFULLY TO MAKE SURE YOU UNDERSTAND WHAT THE POLICY DOES AND DOES NOT COVER. IF THIS COVERAGE EXPIRES OR YOU LOSE ELIGIBILITY FOR THIS COVERAGE, YOU MIGHT HAVE TO WAIT UNTIL THE NEXT OPEN ENROLLMENT PERIOD TO GET OTHER HEALTH INSURANCE COVERAGE. YOU MAY BE ABLE TO GET LONGER TERM INSURANCE THAT QUALIFIES AS "MINIMUM ESSENTIAL COVERAGE" FOR HEALTH INSURANCE UNDER THE AFFORDABLE CARE ACT NOW AND HELP TO PAY FOR IT AT WWW.HEALTHCARE.GOV.".

(c) Any individual selling a short-term, limited-duration health insurance coverage policy in this State in face-to-face or telephonic sales interactions must read out loud the disclosure in subsection (b) to a prospective purchaser. An entity selling a short-term, limited-duration health insurance coverage policy in Illinois must display the disclosure in subsection (b) on the webpage where a prospective purchaser would purchase coverage.

I'd prefer it if they went with 3 months instead of 6, but otherwise it seems like a pretty solid bill. Of course, if Illinois ever does go ahead and set up their own full ACA exchange website, they'd have to change "HealthCare.Gov" to something else (presumably GetCovered.Illinois.Gov, which is their current ACA information portal), but that seems simple enough.

As with California, I'm assuming it will pass both the state Senate and House easily enough, but Illinois has a Republican Governor, so I've no idea whether he'd be likely to sign or veto the bill if it gets to his desk.