States react to, push back against new federal rules on ‘skinny’ health insurance policies

In October, the Trump Administration adopted new rules for short-term (or “skinny”) health insurance plans. Since then, some states have weighed in by adopting new rules of their own, while also reminding insurers that they must still comply with state-level regulations.

“Skinny plans” are not new; they have typically been used by customers as short-term, or stopgap, coverage — for example, if they’re between jobs.

But these plans have taken on new significance since passage of the Affordable Care Act and the Trump administration’s new rules, which allow for the terms of these plans to run longer (up to a year, rather than three months) and to be renewed for up to three years.
Proponents tout these plans as a more affordable option for people who can’t afford policies on the ACA health exchanges. Opponents, however, counter that skinny plans are only affordable because they allow insurers to deny individuals with pre-existing conditions or to exclude coverage that standard health policies must have under the federal law.
That’s one reason why Illinois legislators in November overrode then-Gov. Bruce Rauner’s veto of SB 1737. This new law limits short-term policies to a total of six months, says Sen. Laura Fine. Allowing that much time was a compromise, she notes; some lawmakers wanted these plans banned altogether.
Fine says two concerns prompted her vote to override: First, that these policies could pull all healthy people out of the state’s exchange, thus raising everyone’s rates; and second, a lack of disclosure as to what was and wasn’t covered.
“People thought they were purchasing insurance, but then when they needed it, it wasn’t there,” Fine says. “As a state, we need to stay a step ahead to ensure everyone has insurance.”
In the wake of the new rules, other state actions have included issuing bulletins or notices (through insurance departments or commissioners) reminding insurers that the changes at the federal level don’t pre-empt existing state statutes and rules. Here are other examples of how states are trying to protect consumers:
• North Dakota’s Insurance Department requires insurance companies to ask consumers applying for short-term policies if they have comprehensive major medical coverage in force, if they know that short-term insurance is not comprehensive major medical coverage, and why they’re applying for short-term coverage.
• Ohio’s Department of Insurance issued a consumer alert to let residents know about the differences between “skinny” and standard plans; and
• Nebraska notified insurers that their application materials for short-term plans must “clearly define” pre-existing conditions and describe the policy renewal process “in clear and unambiguous terms.”
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Stateline Midwest: January 20193.15 MB