The legislature has approved legislation expanding short-term health insurance plans, much to the chagrin of medical groups, who say the plans exempt many medical issues and could leave Arizonans facing staggering medical bills.
Senate Bill 1109, sponsored by Sen. David Livingston, R-Peoria, and House Bill 2375, sponsored by Rep. Nancy Barto, R-Phoenix, would increase the amount of time a person could be on a short-term insurance plan from six months to up to three years.
The bills are in part a reaction to a rule issued by the U.S. Department of Health, Human Services and Labor and the U.S. Treasury which extended the recommended amount of time someone can be on one of these plans, often referred to in short as an STLDI.
“It fills a need that is not being met right now,” Livingston said in a Senate Finance Committee discussion of his bill. He said such plans would be good for college students or those who fit in an economic bracket that makes insurance expensive, but are priced out of cheaper plans.
Others on the committee and those in the medical field voiced their concerns about the plans, which are exempt from the coverage mandates put in place by the Affordable Care Act.
“There is a whole host of things these plans don’t have to do,” Thea Zajac, regional director of government affairs for the Leukemia and Lymphoma Society, said to the Arizona Mirror.
Her organization, along with the American Heart Association, the American Cancer Society, the American Lung Association and the Children’s Action Alliance, are all opposed to expanding the use of STLDI plans.
“Given the profound impact the proposed legislation will have on the Arizona health insurance market and its potential repercussions for people with pre-existing conditions, our organizations respectfully ask members… to vote against these bills,” a letter from the groups says about Livingston’s bill and two others.
The Senate approved SB1109 Feb. 13 on an 18-12 vote. The House on Monday voted twice on HB2375. The first time, it failed because a Republican lawmaker was absent, but the chamber held a second vote several hours later and the measure passed 31-28, with only Republican support.
It now heads to Gov. Doug Ducey, who can sign it into law or veto it.
‘Like driving on a donut’
STLDI plans are often cheaper than regular insurance plans, and most commonly are used by people who may have found themselves with a gap in coverage for a variety of reasons.
They’re often cheaper because they cover far less than traditional plans.
“They’ve always existed in some realm,” Zajac said about the plans, but they were never considered to be a person’s primary form of coverage.
“We’re not saying they shouldn’t exist,” Zajac said, clarifying that making them more like primary plans is akin to “driving primarily on a donut tire.”
For example, in Pennsylvania, a woman with an STLDI fainted and hit her head, only to find later that the plan wouldn’t cover most of her medical care and she was left with a $16,000 medical bill. Another person in that state had his payment denied when he discovered a heart condition that the plan stated was a pre-existing condition, according to Lancaster Online.
These plans are exempt from ACA regulations that disallow insurance companies to deny people for pre-existing conditions, which can create issues for people diagnosed with diseases like cancer, according to Zajac.
Zajac said there are stories of people buying STLDI plans and then being diagnosed with cancer, only to have the insurers deny covering treatment, leaving the patients with hundreds of thousands of dollars in medical bills.
But the plans are attractive to people who may be priced out of the healthcare exchange and feel that if they are healthy and don’t want to pay for full coverage.
However, this has led to another unanticipated consequence, according to Zajac.
Since fewer healthy people are going into the health insurance exchange and are opting instead for STLDIs, it is starting to drive up the costs of plans within the exchange as insurers adjust for having fewer healthy people defraying the costs of those with major medical issues.
Filling a gap
Both sides agree that there is a major gap in coverage for a large portion of Arizona residents.
Since 2013, the number of people between the ages of 18 and 65 who are uninsured in Arizona has declined from 20 percent to nearly 12 percent in 2016, according to the most recent Centers for Disease Control data.
Nationally, one in four uninsured people were between the ages of 26 to 34-years-old, according to the Census Bureau.
“It’s not designed to be a long-term policy,” Livingston said defending his bill in committee. “It is designed to meet a short term need, and the need is there.”
Zajac said her group and others want to meet with lawmakers to discuss how to fill that gap, but said it is hard when elected policymakers are vehemently against anything that relates to the ACA or the healthcare exchanges.
Sen. Lupe Contreras, D-Avondale, who has sold insurance plans for 20 years, said he personally only sold 2 of these types of plans when discussing the bill before committee.
“It’s a bridge, not an insurance policy,” Contreras said. “I think we are making that bridge into a long extended highway.”
Livingston agreed that not many of the plans would likely be sold, as it is a “niche” market, but reiterated that it would not cause any undue harm. He also stated that the bill’s intention is not to harm the ACA, but to fill a gap left by the ACA.