The plans have proliferated since Trump administration eased restrictions in 2018
Many consumers have been forced to pay for their own lifesaving treatment under shorter-term health plans that have seen enrollment jumps since the Trump administration relaxed restrictions on them, according to a report released Thursday by House Democrats on the Energy and Commerce Committee.
The short-term plans don’t have to comply with the 2010 Affordable Care Act, so they often exclude coverage for pre-existing conditions and charge women more for the same coverage, the yearlong investigation found.
These plans have proliferated since August 2018 when the Department of Health and Human Services issued a rule expanding access, one of the most significant steps to undercut the ACA after GOP lawmakers in Congress failed to repeal it in 2017.
The administration has repeatedly said the plans give consumers more choices and promote market competition, and that they are a boon for people who can’t afford premiums for ACA-compliant plans.
“President Trump has brought more affordable insurance options back to the market, including through allowing the renewal of short-term plans,” an HHS spokeswoman said. “We’ve been abundantly clear that these plans aren’t for everyone, but short-term plans can be an affordable option for millions of men and women left behind by the Affordable Care Act.”
The investigation of 14 companies that sell or help people buy short-term health plans was launched in March 2019. They included UnitedHealth Group Inc. and Anthem Inc. The committee included nine of the major sellers of such plans in the review.
UnitedHealth and Anthem didn’t immediately respond to requests for comment.
The report found an increase of 27%, or more than 600,000 individuals, enrolled in short-term plans during the 2019 plan year compared with the prior plan year, for a total of about three million consumers enrolled.
Enrollment by brokers increased by approximately 60% in December 2018, and by more than 120% in January 2019, compared with previous months. The increases during those months suggests that these plans are benefiting from the ACA’s open-enrollment season, when people can sign up for or re-enroll in insurance plans.
In its review of consumer complaints against insurers selling short-term plans, the committee reported that it found numerous examples of patients who were denied coverage for treatment, leaving consumers on the hook for hundreds of thousands of dollars.
“Coverage limitations vary greatly from plan to plan and insurer to insurer, and limitations are not made clear in marketing materials, making it extremely difficult for consumers to understand what they are purchasing,” according to a summary of the report.
Some plans impose maximums of $500 per policy period for doctor’s office visits, $1,000 a day for hospitalization, $500 per visit for emergency services and $2,500 per surgery for surgeon service, according to the report.
The committee’s investigation found that, on average, less than half of the premium dollars collected from consumers are spent on medical care, unlike ACA-compliant individual market plans, which are required to spend at least 80% of all premium dollars on health care. The rest of the money generally goes to administrative, overhead and marketing costs.
“These plans are a bad deal for consumers and oftentimes leave patients saddled with thousands of dollars in medical debt,” said Energy and Commerce Chair Frank Pallone (D. N.J.), and subcommittee chairwomen Anna Eshoo (D., Calif.) and Diana DeGette (D., Col.) in a statement.
HHS had estimated that, in 2019, as many as 200,000 people previously enrolled in health coverage on the ACA’s exchanges would buy plans exempt from the health law’s requirements. About 8.5 million people signed up for health plans on the ACA exchanges in 2019.
Many of these plans originally were designed decades ago for limited coverage when people were between jobs, for up to 90 days. The administration’s rule change meant the plans could be extended for a total coverage period of three years.
Supporters of the short-term plans say issuers are required to prominently display in the contract and application materials that the plans don’t have to comply with ACA requirements. They say the plans are about a third of the cost of ACA plans.
Short-term health plans are particularly well-suited to provide affordable coverage for people dislocated by the economic shock of the pandemic, according to an April article published by the Galen Institute, a public-policy free-market research organization.
“Short-term plans are available in many states for as little as 3% of the expanded unemployment benefit and are an important option for many people who have a temporary need for health insurance,” according to the article by Casey Mulligan, who was a chief economist at the White House Council of Economic Advisers under President Trump; Brian Blase, who was on the National Economic Council during the Trump administration; and Douglas Badger, who was with the NEC under George W. Bush.
Short-term plans may reduce the number of uninsured Americans by 200,000 people to 3.7 million people, according to a May 2019 report by Chris Pope, a senior fellow at the Manhattan Institute.
“Nearly 98% of people with job-based health insurance before the pandemic still have job-based health insurance. For those who lost coverage and for previously uninsured people, short-term plans provide valuable financial protection and much better doctor access than most ACA plans,” Mr. Blase said in an interview.
But the committee review found it is common industry practice for short-term plans to engage in administrative processes to avoid paying medical claims. Through a process some have described as “post-claims underwriting,” insurers challenge consumers whose claims may actually be covered by the terms of the plan by requiring them to submit extensive medical documentation often dating back many years to prove their condition wasn’t pre-existing.
Corrections & Amplifications
Brian Blase and Douglas Badger were on the National Economic Council. An earlier version of this article incorrectly said they had been on the White House Council of Economic Advisers. (Corrected on June 25)Write to Stephanie Armour at stephanie.armour@wsj.com