Private Health Insurance: Limited Data Hinders Understanding of Short-Term Plans’ Role and Value Through the COVID-19 Pandemic

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What GAO Found

One option that could be available to those that lose jobs with employer-sponsored insurance (ESI) in the course of the COVID-19 pandemic is short-term plans, which might cover certain health expenses. These plans are generally not subject to federal requirements for individual medical health insurance coverage established by the Patient Protection and Inexpensive Care Act (PPACA), akin to restrictions on basing premiums on pre-existing health conditions and the requirement to cover 10 essential health advantages. Federal requirements for short-term plans are primarily limited to defining their duration—the length of time a consumer may be covered by them. States have broad authority and discretion in regulating short-term plans, and regulation of short-term plans varies across states. For instance, some states have prohibited their sale and a few have imposed restrictions along with federal requirements.

GAO found that limited and inconsistent data hinder understanding of the role short-term plans played in the course of the COVID-19 pandemic for many who lost ESI, akin to whether or not they were utilized by consumers as temporary coverage or as a longer-term alternative to PPACA-compliant plans. Policy researchers and representatives of national organizations that GAO interviewed said there was a scarcity of comprehensive data and data on short-term plans, including data on how many individuals enroll in them and for a way long. As well as, data collected on short-term plans varied across the six states that GAO reviewed.

  • Two states didn’t have data on short-term plan enrollment.
  • Three states reported fewer than 10,000 enrollees in short-term plans and trends varied as as to if enrollment increased or decreased.
  • One state didn’t have short-term plans offered from 2019 through 2021.

State officials within the five states with plan sales weren’t in a position to report on the role of short-term plans for consumers, as none of them collected data on the duration of short-term plan coverage.

Views vary widely in regards to the value of short-term plans to consumers. Officials from two of the six states GAO reviewed and other stakeholders interviewed said that short-term plans meet a vital need for certain consumers who lost ESI in the course of the COVID-19 pandemic. They said short-term plans provide additional options for certain consumers akin to those needing temporary insurance until they grow to be employed again, and people who cannot afford insurance premiums for PPACA-compliant plans. In contrast, officials in two other states and another policy researchers said that short-term plans didn’t provide good value to consumers. While most of those GAO interviewed said that short-term plans often had lower premiums than PPACA-compliant plans, some also emphasized that short-term plans (1) provided fewer advantages, (2) weren’t available to those with pre-existing conditions, and (3) could end in higher total out-of-pocket costs for some consumers in comparison with PPACA-compliant plans. As well as, unlike PPACA-compliant plans, short-term plans aren’t subject to federal requirements to offer consumers with key details about their advantages that may facilitate comparison with other options.

Why GAO Did This Study

Tens of millions of Americans who lost their jobs in the course of the COVID-19 pandemic also lost their ESI. Short-term plan insurance was one option for these consumers. Nonetheless, these plans may be significantly different from other health coverage options for those losing ESI. Subsequently, it is necessary to grasp the role they play available in the market and for individual consumers.

GAO was responsible under the Coronavirus Aid, Relief, and Economic Security Act for monitoring the federal government’s pandemic response. On this report, GAO describes what is thought about short-term plans and the role that they may play for people who lost ESI in the course of the pandemic. Stakeholder views of the worth of short-term plans in meeting consumer needs are also discussed.

GAO conducted a literature search and review of studies on short-term plans and conducted interviews with national organizations akin to the National Association of Insurance Commissioners. GAO also interviewed seven policy researchers chosen to incorporate diverse policy perspectives and stakeholders. This included (1) officials from six state insurance departments chosen to represent different levels and varieties of regulation, and (2) representatives from 4 organizations that sell short-term plans.

For more information, contact John E. Dicken at (202) 512-7114 or dickenj@gao.gov.

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