Oklahoma has the second-highest uninsured rate in the country, with nearly 1 in every 7 Oklahomans uninsured. This is a big problem – and some legislators are pushing to expand the availability of short-term insurance and association health plans (AHPs). Unfortunately, these are poor insurance options. Both have deservedly checkered reputations and rely on misleading advertising to draw buyers – only to leave them without the care they actually need when disaster strikes. These plans are not the solution to Oklahoma’s health care problem.
A step back in quality and access to care
The first of these plans are short-term limited-duration coverage. In Oklahoma, these plans only last for six months, offer bare-bones coverage options, and are often marketed to those between jobs. In that context, these plans may have made sense but not as a year-round plan. So it’s quite concerning to see SB 993, (Sen. Dahm and Rep. Moore), which proposes to expand these extremely limited plans up to 12 months and then allow renewals for up to three years.
This would essentially create a secondary insurance market in Oklahoma, with plans that are cheaper than marketplace plans but don’t have to cover a lot of what we typically expect health insurance to cover. All ACA plans have to cover basic health benefits like maternity care, prescription medicine, and mental healthcare. Short-term plans don’t have to cover these types of care, and of the short-term plans offered in Oklahoma City in 2018:
- None covered maternity care
- 4 in 10 did not cover mental health care
- 7 in 10 did not cover prescription medication
- 7 in 10 did not cover substance-use disorders treatment
These gaps in coverage aren’t something most enrollees can plan for. After all, most people don’t plan to develop a substance use disorder or to need expensive medication. Enrollees in short-term plans could find themselves on the hook for the full costs of unexpected medical needs as a result.
To make matters worse, these plans don’t have to protect people with pre-existing conditions the way real health insurance does. In a state where nearly one in three people have a pre-existing condition like diabetes or hypertension, these plans are not going to help us get healthier.
While rare, a significant concern of these plans is that they may not be there when you need them most. If you get diagnosed with a serious condition, insurers could look for ways to cancel your coverage. In 2009, before existing protections took effect, a man named Otto Raddatz was diagnosed with a kind of cancer called lymphoma – and then was surprised to find his insurance canceled. His insurers had dug through his medical records and found an old CT scan showing gallstones, which were causing no problems and had nothing to do with his lymphoma. They then used this “pre-existing condition” to cancel his care. Most health insurance plans can’t do this anymore – but short-term plans can.
Surprising costs and bad for the market
Short-term plans seem cheap until enrollees need them – then these plans can leave them facing big bills when hospitalized.
The fact that these short-term plans attract healthier people is also what makes them attractive to the insurers who offer them. Marketplace insurers have to spend at least $4 of every $5 paid in premiums on enrollee care and quality improvement. Short-term plans have no such mandate. So they only spend half of what they make on premiums to do the same. Short-term plans have a perverse incentive to minimize enrollees’ care and make their profit that way.
Lowering the bar for bad actors
In addition to expanding short-term plans, lawmakers are also taking steps to roll back standards for association health plans (AHPs). Unlike short-term plans, AHPs are not allowed to reject individuals with pre-existing conditions and easily cancel coverage. However, like short-term plans, AHPs split the market. By luring healthier small businesses and self-employed people, they increase premiums for small firms and individuals who remain in the regular insurance markets. Furthermore, they are allowed to charge much higher premiums based on gender and age than marketplace plans.
One of the unique concerns with AHPs is their history of fraud and insolvency. Two bills this session, HB 1053 and SB 943, (Rep McEntire and Sen. Treat respectively) would lower the bar for their entry onto the market. Oklahoma has set strict regulations around these plans for a reason, and if those regulations are rolled back we should expect bad actors to step in and take advantage of enrollees. It has happened before, and it will likely happen again.
We have a better option
To truly address Oklahoma’s needs and become a “top ten state,” we need to look at real solutions. Instead of expanding junk insurance and splitting the insurance market, we can expand the number of people getting affordable, quality health care. We just need to accept federal funds to expand coverage. By refusing expansion, we are sending our tax dollars to the 37 other states that have expanded coverage. Lawmakers should take the common sense solution to our problems by expanding coverage and helping over 100,000 Oklahomans.