- The American Medical Association and other industry trade groups have filed amici curiae in support of a lawsuit contesting the legality of short-term health plans.
The Association for Community Affiliated Plans (ACAP) contends that the recent federal expansion of short-term health plan enrollment, or the Short-Term Limited Duration Insurance (STLDI) rule, violates several provisions of the ACA.
ACAP’s lawsuit argues that the federal government was not granted Congressional authority to extend short-term health plan enrollment or expand consumer access to plans that don’t cover the ACA’s essential health benefits.
ACAP added that the STLDI rule will also negatively impact healthcare markets and consumers starting in 2019.
The lawsuit says that payers could experience significant membership reductions and financial losses as more people elect to enroll in short-term insurance plans. ACAP estimates that one of their member health plans is expected to lose between $50 million and $100 million in revenue as a result of the STLDI rule.
Providers participating in the initial lawsuit added that the rule could restrict insurance access for many beneficiaries. The groups explained that short-term health plans have extremely limited benefits and don’t cover nearly as many services as ACA compliant plans.
AMA, the American College of Physicians, the American Academy of Pediatrics, and other leading provider organizations supported ACAP’s arguments.
“Amici all share a commitment to increasing access to the best and most affordable healthcare coverage for their members’ patients,” the organizations said. “The Affordable Care Act was an important step towards achieving these goals. The 2018 STLDI rule will undermine the Act’s vital reforms in ways that will harm physicians, patients, and the healthcare system as a whole.”
The provider organizations expressed significant concerns about the impact of the rule on consumer access to healthcare benefits.
AMA and the other groups referenced a study conducted by the Kaiser Family Foundation that found short-term health plans have significant coverage limitations.
Forty-three percent of short-term health plans don’t cover mental health services, 71 percent don’t cover prescription drug benefits, and 62 percent don’t cover substance abuse treatment. Short-term health plans also do not typically provide coverage for maternity services.
AMA and the other organizations added that short-term health plans are designed as transitional insurance to help individuals secure ACA compliant coverage, not as stand-alone plans for the long term.
Consumers are likely to increase their medical or financial risks if they use short-term insurance beyond the typical three-month period, the groups said.
“A STLDI plan’s meager menu of benefits presents little risk if the plan is truly confined to a short gap between periods when an individual would have more comprehensive insurance,” the provider groups explained.
“But if this coverage is used as a substitute for ACA-compliant insurance, the results could be medically or financially catastrophic. Because issuers of STLDI plans can engage in post-claims underwriting, they can rescind coverage or deny claims for services that may be associated with a pre-existing condition.”
The groups said that healthy consumers may want to purchase short-term plans because short-term plans charge lower premiums than ACA plans. However, if healthy short-term plan enrollees develop a serious medical condition, their benefit packages may not effectively cover treatments.
The organizations believe that ACA premiums will increase if the short-term plan market expands because healthier beneficiaries will choose to enroll in short-term plans over ACA plans. It is very likely that ACA health plans will have higher average care costs as healthy individuals drop ACA coverage and unhealthy members continue to remain in these plans.
“As a result, the premiums for ACA-compliant plans will rise as fewer healthy people with lower healthcare costs remain in the risk pool to offset the higher costs of the less healthy people,” AMA and the groups said. “There is no dispute that this will occur if the rule goes into effect; the Defendants themselves acknowledge it.”
The provider groups estimate that health plan premiums could increase by as much as 18 percent in the next year if states don’t impose their own regulations on the short-term insurance market.
The lawsuit and amici curiae emphasize the importance of maintaining ACA health plan markets and challenge federal efforts to expand insurance options that don’t adhere to ACA consumer protections.