A federal proposed rule to allow short-term, limited-duration insurance could expose individuals to higher healthcare costs, reduced benefits coverage, and destabilize the Massachusetts healthcare market, according to a coalition of Bay State provider, insurance, and consumer groups.
MHA joined with Blue Cross Blue Shield of Massachusetts, Health Care For All, the Massachusetts Association of Health Plans, and Massachusetts Medical Society in drafting this letter to CMS
opposing the rule, which would amend the definition of “short-term, limited duration insurance.” Currently, such “STLDI” plans are limited to a maximum of three months of coverage; the proposed rule would expand the maximum coverage period to 12 months.
While insurers would have to include disclaimer language with the plans – explaining that the STLDIs may not comply with federal requirements for health insurance, don’t meet minimal coverage requirement of the Affordable Care Act, and may expose individuals to tax penalties – the Massachusetts group wrote that the cautionary notices are insufficient.
“If this rule is finalized in its current form, it is likely that individuals with younger, healthier risk will move to join STLDI plans, while older and sicker individuals will remain in their traditional policies, leaving the individual market concentrated with unhealthy risk,” the letter states. “As the better risk moves into STLDI plans, premium rates for those individuals that remain will increase, making it more difficult to maintain coverage.”
The Massachusetts groups, in urging the Department of Health & Human Services to retain the existing regulation, wrote: “While STLDI products may provide a limited option in states that have large uninsured populations, Massachusetts has near universal coverage, with multiple programs to assist consumers in finding and affording comprehensive coverage. As such, there is no need in Massachusetts for this type of product, with limited benefits and no protection against tax penalties or high out-of-pocket medical expenses.”