January 16, 2019
Junk Health Plan Savings Come at a Cost
Legislation has been proposed to expand Association (AHP) and Short-Term, Limited-Duration (STLD) health insurance plans in Virginia. These types of plans, not sold on the marketplace and sometimes known as “junk health plans”, often do not meet minimum Affordable Care Act (ACA) standards and can include fine print that leaves consumers at risk of high medical bills. Not only do they fail to properly cover enrollees, but these plans also hurt consumers who are enrolled in marketplace health insurance plans.
Seen as a cheaper alternative to more robust health coverage available on the federal marketplace, junk health plans are able to provide cheaper monthly premiums due to their ability to deny insurance to those with pre-existing conditions and failure to provide critical services such as maternity, substance abuse, and mental health services.
Short-term and association health plans may be attractive to younger consumers who may not anticipate a high need for medical services. However, if they do need any of the critical services not provided, they would be left holding the bill, and others will also feel the impact of their decision.
When healthier people choose to take these plans, they leave a smaller and higher-cost group in the ACA marketplace resulting in higher premiums. Along with the repeal of the individual mandate, research has shown that the expansion of junk health plans contributed to the rise of federal marketplace premiums by 6 percent in 2019.
The expansion of STLDs and AHPs would work to undermine the ACA marketplace and protections for people living with pre-existing conditions. Virginia lawmakers should take a stand and make sure any health insurance plan sold in the state covers critical services such as mental health, substance abuse, and maternity services as is stated in other proposed legislation. (Legislation to provide Virginia-specific protections for those with pre-existing conditions has not been proposed as of this writing.) These safeguards would allow Virginia to build on state investments related to the opiate crisis and behavioral health, while ensuring affordable and reliable health coverage is available for everyone who calls the state home.
A more in-depth account of STLDs and their potential impact to those in Virginia can be found here.
Additional legislation, SB1006 (out of state insurers) and SB1027 (catastrophic plans), is also being considered by state lawmakers. If passed, they would further expand the availability of plans that fall below ACA minimum standards for the general population and leave consumers at substantial risk of high out of pocket payments.