Private health insurance: Limited data hinders understanding the role and value of short-term plans during the COVID-19 pandemic

What the GAO found

One option that may be available to those who lose their jobs with employer-sponsored insurance (ESI) during the COVID-19 pandemic is short-term plans, which can cover some health expenses. These plans are generally not subject to the federal requirements for individual health insurance coverage established by the Patient Protection and Affordable Care Act (PPACA), such as limits on the basis of premiums on pre-existing health conditions and the requirement to cover 10 essential health benefits. Federal requirements for short-term plans are limited primarily to determining their duration—the length of time a consumer can be covered by them. States have broad authority and discretion in regulating short-term plans, and regulation of short-term plans varies by state. For example, some states have banned their sale and some have imposed restrictions in addition to federal requirements.

The GAO found that limited and inconsistent data hinders understanding of the role that short-term plans played during the COVID-19 pandemic for those who lost ESI, such as whether they were used by consumers as temporary coverage or as a long-term alternative to PPACA-plans in accordance. Policy researchers and representatives of national organizations that GAO interviewed said there was a lack of comprehensive data and information on short-term plans, including data on how many people enroll in them and for how long. Additionally, the data collected on short-term plans varied across the six states that GAO reviewed.

  • Two states did not have enrollment data in the short-term plan.
  • Three states reported fewer than 10,000 enrollees in short-term plans, and trends varied as to whether enrollment increased or decreased.
  • One state had no short-term plans provided from 2019 to 2021.

State officials in the five states with plan sales were unable to report on the role of short-term plans for consumers, as none of them collected data on the length of short-term plan coverage.

Opinions vary widely about the value of short-term plans to consumers. Officials from two of the six states reviewed by GAO and other stakeholders interviewed said the short-term plans fill an important need for some consumers who lost ESI during the COVID-19 pandemic. They said short-term plans offer additional options for certain consumers such as those who need temporary insurance until they are re-employed and those who cannot afford the insurance premiums for PPACA-compliant plans. In contrast, officials in two other states and several other policy researchers said the short-term plans did not provide good value for consumers. While most GAO interviewees said that short-term plans often had lower premiums than PPACA-compliant plans, some also noted that short-term plans (1) offered fewer benefits, (2) were not available to those with pre- existing , and (3) may result in higher total out-of-pocket costs for some consumers compared to PPACA-compliant plans. Additionally, unlike PPACA-compliant plans, short-term plans are not subject to federal requirements to provide consumers with key information about their benefits that would facilitate comparison with other options.

Why did the GAO do this study?

Millions of Americans who lost their jobs during the COVID-19 pandemic also lost their ESI. Short-term plan insurance was an option for these consumers. However, these plans may be significantly different from other health coverage options for those who lose ESI. Therefore, it is important to understand the role they play in the market and for individual consumers.

The GAO was responsible under the Coronavirus Relief, Relief, and Economic Security Act for monitoring the federal government’s pandemic response. In this report, GAO describes what is known about short-term plans and the role they can play for individuals who lost ESI during the pandemic. Stakeholder views on the value 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 such as the National Association of Insurance Commissioners. GAO also interviewed seven policy researchers selected to include diverse policy perspectives and stakeholders. This included (1) officials from six state insurance departments chosen to represent different levels and types of regulation, and (2) representatives from four organizations that sell short-term plans.

For more information, contact John E. Dicken at (202) 512-7114 or [email protected]

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