OPINION:
With all the focus on short-term medical and other insurance options, it is easy to lose sight of what is driving some consumers to choose these plans over Obamacare — affordability.
As the administration and Congress make further moves to protect these viable options for consumers and to bring relief for middle-class families impacted by Obamacare’s high costs, supporters of the health care law have cried foul — calling short-term plans and fixed indemnity coverage “junk insurance” and warning of their supposed harm to consumers. But where’s the proof?
Since the 2016 election, Congress, the administration, and the media have zeroed in on insurance reform, largely driven by the very real pain of rising health insurance premiums of the 2010 health care law.
The Department of Health and Human Services estimates average premiums for insurance offered on Obamacare exchanges have doubled since 2010, and will increase another 37 percent in 2018. Deductibles and other shared payments are also increasing rapidly, to the point where some consumers have coverage, but may not be able to afford to see a doctor. This poses an especially grave risk when an illness strikes or an accident happens — exactly when consumers need benefits the most.
To that end, more than 50 million Americans are insured on limited benefit insurance plans, including fixed indemnity plans, to ensure they have the tools to stay on their feet in the face of an emergency. Consumers know these plans are not major medical health insurance — and proponents of fixed indemnity coverage don’t claim otherwise — but they are a means to helping Americans prevent a troubling accident from becoming a devastating bankruptcy.
When triggered by a specified illness or injury, these products provide cash benefits that may be used for any purpose. The benefits are paid regardless of the total medical costs incurred, which insureds can use to pay for first-dollar medical expenses and can help mitigate uncovered expenses.
The majority of these fixed indemnity plans are offered to employees through employer-sponsored benefit packages of large employers, with the employer picking up part or all of the premium cost. Many of these plans are offered for as little as $50 to $100 a month and have been sold in this fashion for more than 20 years.
Still, other workers and families have looked to another alternative for fast, flexible coverage when they need it most: Short-term medical plans.
This could be an attractive option to consumers who may be recently separated from their job but anticipate returning to work soon at a business with generous employer-sponsored coverage. Such individuals are rightfully hesitant to fork over cash for the high cost of a comprehensive individual exchange plan with all the Obamacare bells and whistles.
Short-term plans constitute major medical health insurance, but do not meet all the health care law’s requirements. As such, the Obama administration decreed in 2016 that these plans cannot be used for more than 90 days, down from the previous standard of 12 months.
A proposed rule issued by the Trump administration in February will reverse these limits once again, allowing short-term plans to be offered for up to 12 months — returning to the long-held status quo before the Obama administration decided to reshuffle the deck.
Critics have presented no credible evidence of danger to consumers from these products. In fact, there may be more evidence of harm from only having high deductible, high out-of-pocket health insurance, like the plans many consumers have been relegated to under Obamacare.
The Federal Reserve Board’s “2016 Report on the Economic Well-Being of U.S. Households” showed that 25 percent of insureds with high-deductible health plans reported skipping medical treatments due to cost in the prior year. What’s more, 44 percent could not cover an unexpected $400 emergency expense.
There’s another key difference between short-term and fixed indemnity plans and plans offered under the 2010 health care law that critics often ignore.
Unlike the high-cost Obamacare plans that Americans were, until weeks ago, forced to purchase under threat of government penalty, these alternatives are plans that Americans choose. They are voluntarily offered by employers and insurers and purchased by consumers. There is no evidence that consumers are confused about their coverage or that they do not value the benefits.
Today, Obamacare supporters who place party politics above consumer choice and the realities of working families are clamoring for a crackdown on short-term and fixed indemnity plans, saying they are keeping healthy consumers off the exchanges — but they don’t provide the proof to back it up.
Fixed indemnity plans may actually support the markets under the health care law by providing consumers with cash benefits that help them handle the Obamacare-compliant deductibles — which are rising for 2018 to nearly $4,000 on average for the most popular plans, with a maximum of $7,350 for an individual and $14,700 for a family.
Having worked with insurers, consumers and other stakeholders for decades, our experience is that when a minimum value plan is offered, the number of employees selecting this coverage is the same as when there are additional choices — and with more than half of all counties in the United States down to a single insurance provider on the exchanges, choice is what’s needed now more than ever.
We need to reform and replace the failures associated with Obamacare, but in our efforts to triage this most immediate challenge, we must not further limit consumer access to benefits that help them in trying times.
Short-term medical and fixed indemnity plans are not the problem causing Obamacare’s unwinding; but they may be the safety valve consumers increasingly pick to get away from outrageous premiums. Policymakers ought to take notice before taking away more choice.
• Scott Wood is the CEO of Benefit Commerce Group. Joel White is president of the Health Plan Choices Coalition.
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