Floridians may get a chance to buy cheaper health insurance under a bill awaiting Gov. Ron DeSantis’ approval.
But they better read the fine print.
They may discover their new low-cost, short-term health policies won’t cover much if they get sick. The policies are likely to have a host of coverage loopholes, excluding items like pre-existing medical conditions, mental-health services, prescription drugs or maternity care.
A key provision in Senate Bill 322 would expand a health-insurance alternative that the Trump administration has promoted. It involves short-term health insurance policies.
Some insurance regulators say there is vast difference between the coverage offered by short-term plans versus the comprehensive coverage required under the federal Affordable Health Care Act (commonly known as Obamacare).
“We reject the notion that (a short-term policy) is an affordable alternative to comprehensive insurance that includes the benefits and protections of the (federal health-care act),” Pennsylvania Insurance Commissioner Jessica Altman told Congress in February.
“Unfortunately, we fully expect an increase in consumer complaints on (short-term policies) as consumers attempt to access benefits under their plan throughout this year, only to find that they’ve been misled to purchase a plan that has illusory benefits or that they are denied coverage because of the gimmicky exclusions of the plan,” Altman said.
Another problem with the short-term policies is the way insurance companies have aggressively marketed the coverage to consumers. In some cases, it has drawn allegations of fraud.
The policies were originally designed to provide lower-cost health insurance to someone experiencing a temporary gap in coverage, such as moving between jobs.
The policies were limited to three months under the Affordable Care Act. But through an executive order, the Trump administration (which opposes Obamacare) has increased the policy limits to nearly a year. The policies can be renewed for up to three years.
The short-term policies are cheaper than coverage under Obamacare. But that’s because the policies are exempted from the key requirements of federal health-care act, including covering pre-existing conditions, providing essential benefits and capping consumer out-of-pocket costs.
The short-term plans are not likely to help Floridians with pre-existing medical conditions, such as diabetes. The Kaiser Family Foundation – a nonprofit health policy group – estimates 27 percent of non-elderly adults have pre-existing medical conditions
In a January 2019 study, researchers from the Georgetown University Center on Health Insurance Reforms found that depending on how the short-term policies are marketed, it “can be risky for consumers because many buy these plans mistakenly believing that they are as comprehensive as traditional, (Obamacare)-compliant plans.”
The policies have been controversial. And four states – California, New Jersey, New York and Massachusetts – largely ban their use.
But if DeSantis signs the Senate bill, the use of the short-term health-insurance policies is likely to expand in Florida.
Pasco County Republican Sen. Wilton Simpson sponsored the measure. Simpson said the short-term policy provision is part of a comprehensive health-care bill that he believes will provide more coverage choices for consumers.
The measure will also require insurance companies to offer at least one policy covering pre-existing conditions if Obamacare is repealed or if the courts overturn it.
“It’s going to allow our constituents to continue to look for insurance that is right for them and their families at a more affordable cost,” Simpson said about the insurance package.
The Federal Trade Commission shut down Broward County-based Simple Health Plans based on an investigation alleging the company was running call-center “boiler rooms” in South Florida, filled with people scamming consumers by selling nearly worthless, short-term policies under the guise of comprehensive insurance.
“Through its evidence, the FTC gives a well-documented account of a classic bait and switch scheme—aided by rigged internet searches, deceptive sales scripts, and predatory practice,” a federal judge said last month, granting a preliminary injunction in the case.
“Though consumers believed they were purchasing comprehensive health insurance coverage, (Simple Health) sold them practically worthless limited indemnity or discount plans,” the judge said.
One case federal investigators cited involved Chris Mitchell, a Kansas man who paid for health-care coverage for two years.
But when he was diagnosed with cancer, his hospital told him that his policy did not cover his surgery.
“After spending hours on the phone with multiple companies, Mr. Mitchell had no choice but to proceed with the procedure without coverage,” according to the FTC. “Afterwards, while recovering from surgery, he negotiated for months with the hospital over his $40,000 bill.”
Investigators said “at most” Mitchell’s insurance policy paid $450.83.
In Florida, the short-term health insurance market expansion will come under the regulatory review of Republican Chief Financial Officer Jimmy Patronis.
Companies involved with the short-term policy sales financially supported Patronis in his last campaign for his Cabinet seat. A Florida Phoenix investigation last year showed Patronis took at least $60,000 in contributions from companies linked to Simple Health during his 2018 campaign.
After the Phoenix report, Patronis’ campaign said it would donate the contributions to charity.
Patronis’ agency was also part of a multi-state investigation into the marketing practices of Health Insurance Innovations, a Tampa-based company that sells short-term policies.The investigation resulted in a December settlement where Health Insurance Innovations denied any wrongdoing but agreed to a plan for stricter monitoring of its sales calls and a fuller disclosure of policy details to consumers.
The company previously used the now-shuttered Broward County Simple Health Plans as one of its marketing partners. But the company ended its ties last year and has cooperated in the FTC investigation.