ACA hasn’t stopped sales of short-term, limited benefit insurance plans

Health insurance policies that don’t include common benefits are becoming more popular, according to the San Francisco Chronicle, even though the coverage may not meet the Affordable Care Act’s standards.

Growing sales of these short-term policies appear to be driven by both cost and consumer need to fill gaps in health coverage, like changing jobs or when young adults reach the age of 26 and can no longer be covered by a parent's policy. Even in cases where their situation may allow a customer to purchase coverage on the exchanges outside the open enrollment period, more people are opting for the lower cost plans than purchasing standard insurance or continuing coverage under COBRA.

The Wall Street Journal cited statistics from one provider of these policies, eHealth, which reported more than 147,000 applicants through its site in 2015, more than double the number of people who applied in 2013, before the exchanges opened.

“We thought maybe once people understood the enrollment period better, we’d not see quite the same appetite for short-term (policies), but the demand has stayed consistent,” Nate Purpura, eHealth’s vice president of consumer affairs, told the Chronicle.

Looking at a figure for an individual state, the Portland Business Journal said about 1,000 more Oregonians purchased short-term plans in 2015.

Short-term plans are legal under the ACA, but both financial and medical risks are involved. These plans don’t include benefits like prescription drug coverage or maternity coverage and reject applicants based on preexisting conditions—all practices which fall short of the Affordable Care Act’s standards, which means people purchasing the policies may have to pay the same penalties as people without health insurance. For this year, the penalty will be $695 per adult or 2.5 percent of household income.

Consumer advocates worry purchasers don’t understand those risks and fear the allure of smaller premiums may be driving much needed younger consumers away from the ACA exchanges.

“We need to keep the larger risk pool healthy to keep rates down for everyone else,” Betsy Imholz, special projects director at Consumers Union, said to the Chronicle.

Imholz said she plans to write to state insurance commissioners on finding ways to educate their residents on the risks involved in buying these policies.