Arizona: Bill introduced to turn #ShortAssPlans into "Copper ACA" plans

Arizona Senate Bill 1292 was introduced by Democratic state Representative Rosanna Gabaldon in February. Here's the most relevant portionf of the legislative text:

Title 20, chapter 1, article 1, Arizona Revised Statutes, is amended by adding a new section 20-123, to read:

20-123. Health care insurers; requirements; prohibitions; definitions

A. Notwithstanding any other law, every health care insurer that offers an individual health care plan, short-term limited duration insurance or a small employer group health care plan in this state:

1. Shall:

(a) Ensure that all products sold cover essential health care benefits.

(b) Limit cost sharing for the coverage of essential health care benefits, including deductibles, coinsurance and copayments.

(c) Provide coverage without cost sharing for preventive health care benefits recommended by the United States preventive services task force, the advisory committee on immunization practices of the United States centers for disease control and prevention and the health resources and services administration of the United States department of health and human services.

(d) If the health care insurer offers dependent coverage, continue to offer dependent coverage to adult children until the end of the calendar year in which the adult child attains twenty-six years of age.

2. May not:

• (a) Decline to offer coverage to, or deny enrollment in, a health care plan for an individual or employee of a small employer based solely on the individual's or employee's health status.
• (b) Impose any preexisting condition exclusion or limitation in any health care plan.
• (c) Cancel or refuse to renew a health care plan based solely on an individual's or employee's preexisting condition or health status.
• (d) Use an individual's or small employer group's health status to establish premiums.
• (e) Refuse to cover services that are necessary to treat a preexisting condition.
• (f) Impose annual or lifetime dollar limits on essential health care benefits.
• (g) Apply any additional deductible, copayment or coinsurance based solely on an individual's or employee's preexisting condition.
• (h) Unfairly discriminate against an individual or employee in establishing or adjusting premium rates based on the individual's or employee's age or sex.

What this would essentially do is to convert so-called "Short-Term, Limited Duration" healthcare plans--which are currently exempt from most ACA-compliant coverage and protection requirements--and bake in most (not all) of the ACA's requirements for "Qualified Health Plans" (QHPs).

As noted in my endlessly-revised "3 Legged Stool" visual metaphor, there's basically 8 major "Blue Leg Protections" for ACA-compliant QHPs:

• Guaranteed Issue
• Community Rating
• Essential Health Benefits
• Minimum Actuarial Value (60 - 90% AV)
• No Annual/Lifetime Benefit Caps
• Maximum Out of Pocket Costs
• No-Cost Preventative Services
• Young Adults can stay on Parents Plans until Age 26

Rep. Gabaldon's bill (hey, there's something I like about her name!) would basically add seven of these eight "Blue Leg" protections to short-term plans as well, although it doesn't appear to include the Minimum Actuarial Value requirement (currently, many typical STLDs have actuarial values of around 40% or so, and few rise above 50%).

I should also note that the bullet in the text about "limiting cost sharing for the coverage of essential health care benefits" is a bit open-ended...it says cost sharing has to be "limited" but doesn't seem to specify what it would have to be limited to.

This bill is an attempt to bridge the gap between current STLD regulations (which are pretty anemic in most states) and completely banning them outright (the way California, New Jersey and Massachusetts have done). It would basically turn Arizona STLDs into "Copper" or "Wooden" plans, to use the ACA's "Metal Level" nomenclature (Bronze = 60% AV, Silver = 70%, Gold = 80% & Platinum = 90%).

Technically "Copper" plans are already available via the ACA exchanges in the form of "Catastrophic Coverage" plans, but those are only available to enrollees under 30 years old or who have a specifically-defined hardship/affordability exemption, and they aren't eligible for federal subsidies. There was actually a proposal a few years back during the "repeal/replace" debacle called the "Alexander-Murray" plan which (among other things) would have opened up ACA Catastrophic plans to all enrollees, which sounds like this Arizona bill would amount to.

In any event, while I'm not a fan of STLDs, this would at least beef them up...while also likely causing their premiums to increase to the point that no one would bother buying them, since they wouldn't be eligible for ACA subsidies. Since the only significant upside to a STLD is that they have dirt cheap unsubsidized premiums, there wouldn't be much point in buying one...which is kind of one of the points.

Numerous other states already have limitations on STLDs, although those usually just involve limiting their duration to 3 or 6 months (thus making them "short term" and of "limited duration"). There are a few other states with similar "blue leg protection" rules for STLDs, however, like Colorado, which mandated guaranteed issue and partial community rating rules starting in 2019. Four years later, there isn't a single insurance carrier offering STLDs in the state. Washington State also cracked down on STLDs in other ways in 2021 and again, no carriers offer them in the state any longer.