Health insurance plans that do not meet the Affordable Care Act’s coverage requirements have become more accessible as President Donald Trump and Republicans loosen federal restrictions on them. A handful of states have taken different approaches to establishing their own consumer protections, according to a 50-state analysis by the Commonwealth Fund.

The context

Limited duration health plans are intended to cover people for short periods; for example, when someone is between jobs. These plans are cheaper than full health insurance because they have fewer benefits — for example, many don’t cover preexisting conditions, mental health, or maternity. Under the ACA, the duration of a short-term plan was limited to three months and it could not be renewed.

Trump eliminated this rule, extending the term limit to 364 days and allowing renewal. Beginning in 2019, Republicans reduced the tax penalty to zero for not buying ACA-compliant health insurance, opening the door for short-term plans to be marketed as alternatives to the ACA for people who do not want to pay for coverage beyond what they think they will need.

The problem is that, increasingly, short-term plans and other limited-benefit plans are being marketed and sold to people who are looking for full health insurance. That’s what happened to Stephanie Sena, an adjunct professor at Villanova University, who found out that her health plan wasn’t what she expected when it didn’t cover her hospitalization for sepsis or subsequent partial foot amputation.

The study data

Researchers with the Commonwealth Fund reviewed current law and newly approved regulations for short-term health plans in all 50 states.

They looked at whether states offered eight potential protections:

  • Limit the plan’s duration to less than the federal limit.

  • Limit on plan’s renewal or ability for insurer to extend coverage duration by selling multiple plans at once.

  • Restriction on charging higher premiums based on gender, age and other factors,

  • Requirement to cover pre-existing conditions.

  • Ban on rescinding coverage once issued.

  • Requirement to cover essential health benefits.

  • Requirement to spend a certain portion of premium revenue on medical care.

  • External appeals process for consumers.

The findings

Pennsylvania is one of four states that does not offer any of the protections researchers analyzed. Florida, Georgia, and Alabama are the others.

Pennsylvania insurance commissioner Jessica Altman has been outspoken about short-term health plans, and her department has been aggressive in investigating bad actors, revoking licenses from at least a dozen brokers since 2016. But unlike some other states, Pennsylvania does not give its insurance commissioner authority to issue regulations that limit short-term plans or create new consumer protections.

In states where insurance commissioners don’t have regulatory authority over short-term plans, any new regulations would have to be created through law, said Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms and a co-author of the report.

New Jersey is among four states that ban all or most short-term plans. New York, Massachusetts, and California are the others.

New Jersey’s protections date to health insurance reforms in the 1990s that required short-term plans to meet all the consumer protections that apply to individual market health plans and the state’s ongoing effort to maintain strict regulation over health insurance, Palanker said. When Republicans effectively eliminated the federal mandate that people buy health insurance or pay a penalty, New Jersey created its own.

Five states and Washington, D.C., passed laws in 2018 addressing short-term plans: California, Hawaii, Illinois, Maryland, and Vermont.

And four more states established new regulations for short-term plans in 2018: Colorado, Delaware, New Mexico, and Washington.

States with new rules in 2018 took a range of approaches to restrict short-term plans, such as limiting their duration and ability to be renewed, requiring them to cover pre-existing conditions, and banning them from charging higher premium rates based on age and gender.

Many states have some regulations for short-term plans that have been on the books for years. For example, in about half of states the plan duration limit is shorter than the federal limit and about two-thirds of states have an external appeals process for consumers.

The next steps

The market for short-term health plans is expected to grow, as people strained by rising health care and insurance costs look for ways to save money. While a short-term plan may be appropriate for some consumers, others will find out only once they receive massive bills that their plan doesn’t have the coverage they expected. Researchers concluded that states will play a critical role in protecting consumers and that there are a range of policy approaches that can be tailored to their state market’s specific needs.

When it comes to investigating bad actors, states rely on complaints from consumers. Pennsylvania’s insurance department received more than 50 complaints last year, and complaints are on the rise this year, the department has said. You can file a complaint online or by calling 877-881-6388.