Shorter-Term Health Plans Force Many to Pay for Lifesaving Treatments, Report Finds

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

Traditional IRA Withdrawal Rules

MEDICAL EXPENSES AND HEALTH INSURANCE PREMIUMS

You’re allowed a distribution to pay for unreimbursed medical expenses that exceed 7.5% of your adjusted gross income, or to pay for health insurance premiums for you, your spouse or children when you are unemployed.

A couple of things to note here: Traditional IRA money can be used to pay for the portion of the medical expenses that tops 7.5% of your adjusted gross income, meaning if you make $100,000 and have $15,000 in unreimbursed medical costs, you can use IRA assets to pay for $7,500 of it. For the health insurance during unemployment exception, you must take the distributions no more than 60 days after you’ve gotten a new job.

Why the Coronavirus Could Threaten the U.S. Economy Even More Than China’s

Why the Coronavirus Could Threaten the U.S. Economy Even More Than China’s

If people stop traveling and going to the dentist, the gym or even March Madness basketball games, the impact could be enormous, an economist says.

After a string of deaths, some heart-stopping plunges in the stock market and an emergency rate cut by the Federal Reserve, there is reason to be concerned about the ultimate economic impact of the coronavirus in the United States.

The first place to look for answers is China, where the virus has spread most widely. The news has been grim with deaths, rolling quarantines and the economy’s seeming to flat line, though the number of new cases has begun to fall.

Advanced economies like the United States are hardly immune to these effects. To the contrary, a broad outbreak of the disease in them could be even worse for their economies than in China. That is because face-to-face service industries — the kind of businesses that go into a tailspin when fearful people withdraw from one another — tend to dominate economies in high-income countries more than they do in China. If people stay home from school, stop traveling and don’t go to sporting events, the gym or the dentist, the economic consequence would be worse.

In a sense, this is the economic equivalent of the virus’s varied health effects. Just as the disease poses a particular threat to older patients, it could be especially dangerous for more mature economies.

This is not to minimize the indiscriminate and widespread damage that the disease has caused by disrupting the global supply chain. With shortages of everything from auto parts to generic medicines and production delays in things like iPhones and Diet Coke, a great deal of pain is coming from the closing of Chinese factories. That proliferating damage has central banks and financial analysts talking about a global recession in the coming months.

Nor is it to discount the possibility that the United States will be spared the worst effects. Scientific and public health efforts might limit the spread of the virus or quickly find a treatment or vaccine. The warmer weather of summer might slow the spread of the coronavirus as it usually does with the seasonal flu. Many things could prevent an outbreak as large as the one in China.

But it is to say that an equivalent outbreak in the United States might easily have a worse economic impact.

As a baseline, several factors work against the United States. China’s authoritarian government can quarantine entire cities or order people off the streets in a way that would be hard to imagine in America, presumably giving China an advantage in slowing the spread of the disease. In addition, a large share of American workers lack paid sick days and millions lack health care coverage, so people may be less likely to stay home or to get proper medical care. And 41 percent of China’s population lives outside urban areas, more than twice the share in the United States. Diseases generally spread faster in urban areas.

Beyond those issues, however, is a fundamental difference in economic structure: When people pull back from interacting with others because of their fear of disease, the things they stop doing will frequently affect much bigger industries in the United States.

Consider travel. The average American takes three flights a year; the average Chinese person less than half a flight. And the epidemiological disaster of the Diamond Princess has persuaded many people to hold off on cruises. That cruise ship stigma alone potentially affects about 3.5 percent of the United States, which has about 11.5 million passengers each year, compared with only 0.17 percent of China, which has about 2.3 million passengers.

People may stop attending American sporting events. There have even been calls for the N.C.A.A. to play its March Madness college basketball tournament without an audience. But sports is a huge business in the United States. People spend upward of 10 times as much on sporting events as they do in China.

And if 60 million Americans stop spending $19 billion a year on gyms, that would be a much a bigger deal than if the 6.6 million gym members in China stopped spending the $6 billion they devote to gyms now.

That’s just a start. Who wants to go to the dentist or the hospital during an outbreak if a visit isn’t necessary? Yet health spending is 17 percent of the U.S. economymore than triple the proportion spent in China.

Of course, not every service sector is so much larger than in China. Retail and restaurants, for example, have comparable shares of gross domestic product in both countries.

But over all, the United States is substantially more reliant on services than China is. And, on the flip side, agriculture, a sector not noted for day-to-day social interaction and so potentially less harmed by social withdrawal, is a 10 times larger share of China’s economy than it is in the United States.

So for all the talk about the global “supply shock” set off by the coronavirus outbreak and its impact on supply chains, we may have more to fear from an old-fashioned “demand shock” that emerges when everyone simply stays home. A major coronavirus epidemic in the United States might be like a big snowstorm that shuts down most economic activity and social interaction only until the snow is cleared away. But the coronavirus could be a “Snowmaggedon-style storm” that hits the whole country and lasts for months.

So go wash your hands for the full 20 seconds. And show some more sympathy for the folks quarantined in China and elsewhere. Because if it spreads rapidly in the United States, it could be a heck of a lot worse.

If Elizabeth Warren really wants to unrig the system, she should focus on the Dream Hoarders

Odds are that you have not been following the recent libertarian dust-up over the merits of an Elizabeth Warren presidency. To give a brief recap: The main contenders were Will Wilkinson and Jerry Taylor of the “liberaltarian” Niskanen Center, who have been Warren-friendly to varying degrees; their opponents were colleague Samuel Hammond, along with Tyler Cowen of the more traditionally libertarian Mercatus Center, who touched off the whole debate with a withering critique of Warren’s policies.

A point-by-point exploration of their arguments would exceed the space allotted for this column by several thousand inches. But I think one can sum up the libertarian approach to Warren with a single question: How big a problem do you think billionaires, and the mega-successful corporations they helm, pose to the average American? Actually, come to think of it, I think that’s about how you’d sum up the question of Warren from any angle.

Which is why this debate ultimately matters to a lot more people than just some cranky libertarians: It speaks directly to a whole lot of young people who see that the economy doesn’t work for them the way it did for their parents and grandparents, and therefore conclude that somewhere along the way, the people it is working for — the barons of finance, the giants of Silicon Valley — must have rigged the system in their favor.

To be fair, they’re not entirely wrong. As Adam Smith once wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Bankers and tech executives very much included. So I find myself nodding in agreement with Wilkinson — and, by extension, with the progressive base of the Democratic Party — when he says: “Warren’s general diagnosis of the problem — it’s a rigged system of anticompetitive rent-seeking enabled by insufficiently democratic and representative political institutions — is broadly similar to my own.”

Yet they’re not entirely right, either. Are big corporations, or billionaires, or banks, or tech giants, or health insurers and pharmaceutical firms — to name some of Warren’s favorite targets — really the reason that young people are struggling

  • with enormous student loans? Are they the reason that millennial homeownership lags that of their parents? Are they the
  • reason that recent college graduates are more likely than their elders to be underemployed? Have they
  • driven the cost of health insurance to its current stratospheric levels?

Sure, Warren may be eager to sic her Consumer Financial Protection Bureau on your mortgage lender if you fall afoul of some obscure clause, but that’s not the problem for most Americans. They’re much more likely to struggle with finding affordable housing in prosperous cities. In fairness, Warren does have a plan to ease the zoning regulations that cause the shortage — but for some reason she rarely talks about it on the campaign trail, possibly because it’s constitutionally dubious, but more likely because it would alienate her affluent suburban base.

Similarly, Warren is eager to forgive student loans — a $1.6 trillion transfer to some of the most affluent members of society — but not to attack degree creep, which has walled off most of the best jobs for those who hold a bachelor of arts while enriching a lot of colleges. She targets insurers and drugmakers, but not the hospitals and medical workers who drive most of our health-care costs.

Too many of her proposals are like this; they focus on corporate villains or billionaires while ignoring the much broader class of people that Richard Reeves of the Brookings Institution dubbed the “Dream Hoardersthe well-educated upper-middle-class people who are desperate to pass their privilege onto their kids, and are unhappy about the steadily mounting cost of doing so. They’re Warren’s base.

Unfortunately, the Dream Hoarders — and I include myself in their number — are a much bigger problem for the rest of America than the billionaires whose wealth Warren promises to expropriate. Those billionaires got that way by building companies that disrupted cozy local monopolies, and they fund coding camps for high-school dropouts; Dream Hoarders

  • protect their professional licensing regimes and
  • insist on ever more extensive and expensive educations in the people they hire. Dream Hoarders also
  • pull every lever to keep their own housing prices high — and poorer kids out of their schools — while
  • using their wealth to carefully guide their children over the hurdles they’ve erected.

Which may be why the best predictor of a neighborhood with a low degree of income mobility is not the gap between the top 1 percent and everyone else — the gap that Warren focuses on with all her talk of taxing billionaires — but

If you really want to unrig the system, you need to focus less on a handful of billionaires than on the iron grip that the Dream Hoarders have on America’s most powerful institutions — including, to all appearances, Elizabeth Warren’s campaign.

Who’s Afraid of the Budget Deficit?

Democrats shouldn’t put themselves in a fiscal straitjacket.

On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.

There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.

.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.

You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.

But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?

.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.

Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.

Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.

.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.

.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.

.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.

Trump’s Ignoring Our Real ‘National Emergies’

  • If the caravan proceeds by foot, during the period of its journey 16,800 Americans will die from drugs.

  • In the period of the caravan’s journey, perhaps 690,000 Americans will become homeless, including 267,000 children.

  • In the period of the caravan’s journey, 8,850 Americans will die from guns, including suicides and murders.

  • In the period of the caravan’s journey, perhaps 9,000 Americans will die from lack of health insurance (people die at higher rates when they’re uninsured, although there’s disagreement about how much higher).

Maybe the real “National Emergy” is drugs, homelessness, gun deaths and lack of health insurance?

.. the issue isn’t really even immigration. Rather, it’s fearmongering. Scholars have found that reminding people of dangers makes them temporarily more conservative, so this kind of manipulation can be an effective campaign tactic.

Remember the 2014 midterm elections? This is a replay. In the run-up to voting, Republicans ratcheted up fears of a “border crisis” with terrorists sneaking in from Mexico to attack us, plus alarm about Ebola and the risk that the outbreak in West Africa could reach America.

.. Trump also tweeted then that if a New York physician who returned from West Africa developed Ebola (as he later did), “then Obama should apologize to the American people & resign.”

In the 2014 elections, Republican candidates ran hundreds of ads denouncing the Obama administration’s handling of Ebola. News organizations chronicled this “debate,” but in retrospect they were manipulated into becoming a channel to spread fear — and win Republican votes.

.. Yet Ebola, like the Central American caravan, is a reminder of the distinction between grandstanding and governing.

.. Obama’s technocratic Ebola program — working with France and Britain, plus private aid groups — may have worried voters, but it was effective.

.. the Ebola virus was contained and eventually burned out. Good governance often turns out to be bad politics, and vice versa.

.. Perhaps the approach with the best record is aid programs to curb gang violence in countries like Honduras, to reduce the factors that lead people to attempt the dangerous journey to the United States. Yet it’s not tangible and doesn’t impress voters. So Trump instead is talking about an expensive wall and about cutting aid to Central America, even though this would magnify the crisis there and probably lead more people to flee north.

.. I fear that we in the media have become Trump’s puppets, letting him manipulate us to project issues like the caravan onto the agenda.

.. Trump is right that, although there’s no evidence of it, “there could very well be” Middle Easterners hiding in the caravan. It’s equally true that the Easter Bunny “could very well be” in the caravan. Speaking of Easter, Jesus Christ “could very well be” in the caravan.

.. So let’s stop freaking out about what “could very well be” and focus on facts. Here are two:

  1. First, the Caravan won’t make a bit of difference to America.
  2. Second, we have other problems to focus on, from drugs to homelessness to health care, that genuinely constitute a “National Emergy.”

People vs. Money in America’s Midterm Elections

They seek to restore access to a middle-class life by providing decent, well-paying jobs, reestablishing a sense of financial security, and ensuring access to quality education – without the chokehold of student debt that so many graduates currently face – and decent health care, regardless of pre-existing medical conditions. They call for affordable housing and a secure retirement in which the elderly are not preyed on by an avaricious financial sector. And they seek a more dynamic, competitive, and fair-market economy by curbing the excesses of market power, financialization, and globalization, and by strengthening workers’ bargaining power.

These perquisites of a middle-class life are attainable. They were affordable a half-century ago, when the country was substantially poorer than it is today; and they are affordable now. In fact, neither America’s economy nor its democracy can afford not to bolster the middle class. Government policies and programs – including public options for health insurance, supplementary retirement benefits, or mortgages – are crucial to realizing this vision.

.. In a normal democracy, these ideas would, I am confident, prevail. But US politics has been corrupted by money, gerrymandering and massive attempts at disenfranchisement. The 2017 tax bill was nothing short of a bribe to corporations and the wealthy to pour their financial resources into the 2018 election. Statistics show that money matters enormously in American politics.