Keep US Covered posted on March 23, 2021 

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A health care regulation enacted in the previous administration has helped flood the market with low-quality health insurance that skirts Affordable Care Act rules, leaving Americans vulnerable to expensive medical bills. Reversing this misguided policy gives the Biden Administration an opportunity to restore quality coverage options that Americans can count on.

 

What is STLDI?

 

STLDI stands for Short-Term Limited Duration Insurance. Under the ACA, any insurance plan sold in the individual market must meet certain minimum coverage requirements. But STLDI coverage is exempt from those rules. These plans typically do not cover things like prescription drugs, maternity care, mental health, or free preventive care. They also have strict limits on how much care they will pay for, often below what’s adequate. STLDI serves an important purpose in the U.S. health care system, but this new rule has harmful consequences that stretch their usage beyond what’s appropriate or fair.

 

How were the nature of STLDI plans changed?

 

STLDI exists, in theory, to fill gaps in an individual’s coverage, like when someone is in between jobs. If someone needs a backstop, a low-cost plan can soften the blow of a medical emergency, hence the name. But the new rule, finalized in 2018, makes these plans a regular part of the health care market, extending the definition of “short-term” to as long as three years. That means consumers see these plans and their relatively low costs when they shop for insurance and could be under the false impression that they provide the comprehensive coverage they need in the long-term. Without guardrails, consumers could be buying what some call “junk insurance” and will not realize their mistake until it is too late.

 

What’s the big deal?

 

This rule change does significant harm to consumers by making it difficult to sort through good and bad options, leaving many with weaker coverage, and leaving them exposed to medical bills they cannot afford.

 

Bad options everywhere

Because of the new STLDI rule, consumers might be fooled into believing that these plans keep them protected. In truth, STLDI lacks the comprehensive coverage everyone needs, but the inadequacy of junk insurance isn’t immediately obvious when it’s sold right alongside stronger options. It’s unfair to assume that every consumer has high health care literacy and can sort through the minutiae of every plan they consider. Because of the low costs associated with STLDI plans, they are particularly attractive. But these plans are landmines that leave people unprotected with inadequate care over a long stretch of time.

 

Weaker coverage

STLDI plans are nowhere near comprehensive enough to keep Americans covered and protected. These plans cover significantly fewer services, especially the routine exams and preventative care that are critical to long-term health. With these plans, Americans are typically left paying for prescription medication out of pocket and have a much smaller network of doctors and specialists available to them. It may encourage holders of these plans to skip doctors visits to save money, or leave them exposed to large bills they were not expecting.

 

Expensive medical bills

With smaller networks and strict limits under STLDI plans, Americans are getting hit with unaffordable bills. When a health need arises, Americans should know they are covered. But junk insurance only provides the mirage of being covered. After a procedure, patients may discover that the coverage they have comes up short and are left to make up the difference out of their own pockets. Health coverage should provide peace of mind, not create new anxiety beyond a medical challenge.

 

What can we do about it?

 

Luckily, President Joe Biden already put STLDI plans on notice when he signed an executive order in January directing his administration to review this misguided rule. Rescinding the rule and restoring the proper role for STLDI – for people who need to fill in a coverage gap – will keep consumers from being under the false impression that they are fully covered when they buy these plans. Keep US Covered, and other like-minded organizations, support the Biden administration in their efforts to protect consumers and quality coverage. You can learn more and join the effort at KeepUSCovered.org.

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