2020 OPEN ENROLLMENT ENDS (most states)

Time: D H M S

Colorado to grab #ShortAssPlans by the short ones starting April 1st

Last year I briefly attempted to keep track off the dozens of various state-based "ACA 2.0" protection/improvement bills flying around various state legislatures. I eventually abandoned this project since it became too difficult to keep up with, but I'm still reporting case studies as they come to my attention...and Louise Norris has just alerted me to some pretty big changes going into effect in Colorado this April.

First up: Short-term plans are being heavily neutered. In addition to being limited to 6 months per year (which is still longer than the Obama Administration's 3-month cut-off)...

Short-term plans will have to charge older adults no more than three times as much as they charge younger adults. Short-term plans are generally not available after a person is 64, but a quick check of plans currently available in Colorado show that some insurers are charging a 64-year-old up to seven times as much as a 21-year-old. That will have to stop as of April.

Short-term plans will have to be guaranteed-issue. Insurers will no longer be able to reject applicants based on their medical history. This is a huge change, as short-term plans currently base eligibility on a series of basic health screening questions (this is an example of one company’s pre-screening questions; applicants who answer yes to any of those questions are not eligible for coverage, and that will have to change as of April).

Short-term plans will still be allowed to exclude pre-existing conditions, but pre-existing conditions are defined in the regulations as a condition that was diagnosed, treated, or symptomatic in the 12 previous months.

Short-term plans will have to cover not only state-mandated benefits (already required, as noted above), but also the ACA’s essential health benefits. This is part of Colorado Revised Statute 10-16-102(22), and that provision will apply to short-term plans as of April. So short-term plans will no longer be able to avoid covering prescription drugs or mental health care, which is currently common in the industry.

The above restrictions bring STPs much closer to being in line with ACA-compliant individual market policies...and in doing so, defeats much of the reason carriers push STPs in the first place (huge profit margin, the ability to kick enrollees to the curb and so forth). It's not nearly as to the point as banning them outright the way California has done, but it's a lot better than allowing STPs to be free-reigning junk plans. But wait, there's more!

Colorado has extensive filing requirements (regulation 4-2-59) for insurers that wish to sell short-term plans in the state, including a requirement that rates for short-term plans can only vary based on age, tobacco use, geographic area, network factors, and whether the policy covers a single individual or multiple family members (this is the rule that’s being amended as of April 2019, to include the 3:1 ratio cap for age-based premiums; network factors is also being eliminated from the list of things on which insurers can base premiums).

The filing requirements also include a rule stating that carriers must have a loss ratio of at least 60 percent. Unlike the ACA’s medical loss ratio, which excludes certain expenses from the calculation, Colorado’s calculation is just total claim amounts divided by total premiums collected. And the updated version of Regulation 4-2-59 calls for a minimum loss ratio of at least 80 percent.

In other words, STPs are also being restricted to playing by the same rules as ACA plans when it comes to price variances and gross profit margins.

Good for you, Colorado!