APA Appeals Court Decision to Expand ’Skimpy’ Health Plans

STLDI plans often exclude health benefits mandated as “essential” by ACA, such as mental health and substance use disorder services, emergency services, prescription drug coverage, and hospitalization coverage, according to a 2018 review of STLDI plans by the Kaiser Family Foundation. Rates for short-term health plans vary widely, but they typically cost less because they offer less insurance protection. For example, monthly premiums for a short-term plan in Chicago ranged from $55 to $573 a month, compared with $305 a month for the lowest- cost, ACA-compliant plan.

Unlike ACA-compliant plans, STLDI plans can deny coverage due to preexisting conditions, retroactively cancel coverage for certain medical claims, and surprise enrollees with huge bills because of a lack of in-network providers, according to an assessment by the Urban Institute, a nonprofit research institution. Short-term plans can pose risks to consumers who mistakenly believe that they are as comprehensive as ACA-compliant plans. Marketing websites and brokers selling short-term plans provide limited information on benefits and plan limits and push consumers to make purchasing decisions quickly over the phone, according to the Urban Institute.

Last September, APA and the same coalition filed a lawsuit asserting that the short-term plan rule circumvents congressional intent by creating an alternative individual health insurance marketplace beyond the reach of the ACA. The AMA filed a friend-of-the-court brief in support of the lawsuit (Psychiatric News).

A major concern about these plans is that they will incentivize healthy individuals to purchase the cheaper, short-term policies over buying comprehensive, ACA-compliant plans, leading to greater instability in the marketplace and raising the cost of comprehensive coverage for people who have serious health conditions.

Senior District Judge Richard Leon for the U.S. District Court for the District of Columbia granted summary judgment July 19 in favor of the administration’s rule, writing that there is insufficient evidence to show that the rule will “caus[e] any meaningful number of individuals to leave the Exchange markets and purchase STLDI plans.” Judge Leon also concluded that while the potential impact of the rule is minimal, it would provide “undeniable benefits” by providing a lower-cost insurance option for individuals who drop their comprehensive coverage.

About 200,000 individuals are projected to drop their comprehensive health insurance coverage this year in favor of short-term plans, according to federal estimates contained in the 2018 rule. Enrollment in short-term plans is expected to climb by 600,000 by the end of the year.

In response to the rule, several states have taken steps to ban or limit short-term plans or to add coverage requirements for these products. California, Hawaii, Massachusetts, New Jersey, New York, and Oregon are among the states that have banned or limited the sale of short-term plans.

Acting NAMI CEO Angela Kimball called the federal court rule a step in the wrong direction. “It lets junk plans compete with comprehensive health insurance even though they don’t have to provide the same level of mental health coverage—or any mental health coverage at all,” she said. “This undermines the very intent of mental health parity.” ■