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CQC Comments On STLDI Proposed Rule

In a letter to The Secretaries of Health and Human Services, Treasury, and Labor, Consumers for Quality Care, Prevention Institute, Patient Power, National Minority Quality Forum, Autism Speaks, Epilepsy Foundation, National Partnership for Women & Families, Black Women's Health Imperative, and First Focus commented on the new proposed rule on Short-Term, Limited-Duration Insurance.

The Honorable Alex Azar
Secretary of Health and Human Services
U.S. Department of Health and Human Services
200 Independence Avenue SW
Washington, DC 20201

The Honorable R. Alexander Acosta
Secretary of Labor
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

The Honorable Steven Mnuchin
Secretary of Treasury
U.S. Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Re: Proposed Rule, Short-Term, Limited-Duration Insurance CMS-9924-P

Dear Secretary Azar, Secretary Acosta and Secretary Mnuchin,

Thank you for the opportunity to comment on the Proposed Rule Short-Term, Limited-Duration Insurance CMS-9924-P. As health care advocates who have come together to speak up for patients and health care consumers, we would like to express our strong opposition to this proposed rule.

Currently, short-term, limited-duration insurance (STLDI) serves the purpose of providing a stop-gap between other means of coverage when consumers are in between jobs or waiting for Open Enrollment to start. These policies are available for three months and are exempt from many important Affordable Care Act (ACA) requirements designed to ensure comprehensive levels of coverage for consumers. Insurers are also able to vary the rates of these plans based on sex, health status and age, as well as deny providing coverage for those with preexisting conditions. Due to their lack of comprehensiveness and because they do not have to insure everyone, these plans are typically lower cost and thus may attract enrollees who are looking for a low premium and are unaware that the coverage may not protect them if they get sick. We believe the proposed rule’s expansion of STLDI coverage for up to 12 months of coverage, with the possibility of further renewals, will result in a race to the bottom and an influx of low-quality plans for consumers choosing their coverage.

We are particularly concerned with the following proposals that would take effect if the proposed rule is approved in its current state:

  • Eliminating Key Consumer Protections, Including Essential Health Benefits: Short- term plans are exempt from ACA consumer protections and come with substantial risks for consumers. Insurers can vary rates of these plans based on sex, health status and age. These plans are also not guaranteed issue, meaning that insurers can deny coverage based on preexisting conditions, including denying any coverage to a consumer or denying coverage of particular treatment. STLDI plans also exclude coverage for conditions an individual did not know they had or were not aware required medical intention. For example, some insurers use an “ordinarily prudent person” or “reasonable person”standard to exclude coverage for a preexisting condition for which an individual hadn’t sought medical advice, diagnosis, care, or treatment or thought there was a need. Pregnancy is also considered a preexisting condition if the insured is already pregnant on the day coverage begins.
  • Going Against STLDI Intended Use: Short-term limited-duration insurance policies contain limited protections for consumers and were designed to bridge short gaps in coverage. By allowing for extensions of STLDI plans, the proposed rule would make it easier for individuals to use short-term plans as a vehicle for primary coverage. An issuer would be permitted to issue these low-quality policies for up to 365 days and allow renewals, effectively no longer making them “short term plans.” However, because of the medical underwriting in this market, issuers could deny coverage renewals or extensions to people who develop health conditions and complications. Greater availability of short- term plans could lead to sub-quality coverage, and increases in periods of time in which people are underinsured, leaving consumers at financial risk and creating more uncompensated care.
  • Driving-up Premiums in Individual Market: Allowing longer-term short-term plans will encourage healthy people to use short-term plans as an alternative to ACA plans, rather than a gap-filler plan. They will drive up premiums in the individual market, making comprehensive coverage with preexisting condition protections less affordable for consumers, particularly for people ineligible for premium tax credits.
  • Confusing for Consumers: It is vital for consumers to understand the limits of short- term plans and to understand that these plans do not offer comprehensive coverage. The lack of key protections in STLDI plans needs to be clear and easily understandable by consumers, especially because allowing short-term plans to provide coverage for just under one year will make it more difficult for consumers to distinguish between short- term plans and ACA-compliant plans. The draft notice language in the proposed rule – or the draft disclaimer that would accompany STLDI plans so consumers could distinguish between the plans – is not clear enough when describing the differences in plan requirements between short-term plans and ACA-compliant plans. In addition to requiring language clarifying that this is a plan not designed to comply with federal requirements, we recommend making any final language more explicit by providing clear examples of ACA requirements that do not apply to short-term plans, such as coverage for preexisting conditions and the list of essential health benefits. It should also be made explicitly clear that loss of eligibility or coverage in a short-term plan does not trigger a special enrollment period and the enrollee might have to wait until an open enrollment period to get other health insurance coverage.

Short-term limited-duration insurance is, by name, meant to be for a short, limited duration. We therefore urge you to maintain the existing definition limiting these plans to less than 3 months and this duration should include any extensions to the policy. Allowing people to remain in these plans for 12 months or longer exposes enrollees to significant financial risk. A change in the federal rule to allow renewals of these plans would suggest clear intent to circumvent the ACA and undermine the risk pools in the individual market and states’ ability to regulate these markets. States are the primary regulators of insurance and should maintain authority to regulate the application and reapplication process for short-term insurance.

We firmly believe that if approved in its current form, this rule will hurt patients across the United States. We are asking that you amend this proposal and protect consumer access to quality care.

If you have any questions, please don’t hesitate to contact us.

Thank you,

Consumers for Quality Care Prevention Institute
Patient Power
National Minority Quality Forum Autism Speaks
Epilepsy Foundation
National Partnership for Women & Families
Black Women’s Health Imperative
First Focus

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