I almost got snared in the short-term health insurance market

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Sarah Gantz, a Philadelphia Inquirer reporter, has done some great work spotlighting people who were snared by sales pitches for short-term health plans that left them with huge bills when they got seriously ill or injured. Her latest concerns a woman who got stuck with a $36,000 bill when her fixed indemnity plan covered only a small fraction of the tab for surgery after she broke her wrist and back (!) -- (the latter doesn't seem to have caused lasting damage):

Martin thought she’d bought a comprehensive health insurance plan through the government-regulated Affordable Care Act marketplace, healthcare.gov. But she really visited a website cunningly crafted to look like an ACA portal, which put her in contact by phone with a salesman. He sold her plan that turned out to offer only minimal coverage, and when Martin needed help, his number was disconnected.

The larger point is that since the Trump administration changed the rules to enable so called short-term, limited duration (STLD) plans to extend plan terms to up to a year, and touted them as a cheap alternative to ACA-compliant plans, deceptive marketing for such plans has exploded. Robocalls, websites meant to snare people seeking HealthCare.gov (with help from Google ads), and hard-sell-quick-sell phone techniques are well chronicled by Gantz.

Louise Norris, a broker of individual market insurance who puts her clients' interests first (and has compiled a virtual encyclopedia on the subject at healthinsurance.org), acknowledges that there is a role for STLD plans, and that not all of them are terrible. But the market is honeycombed with coverage traps.  In fact, Louise helped me, and someone I was helping, avoid perhaps the subtlest of snares in the STLD market.

I was trying to help a healthy single man under 30 who'd fallen into a narrow ACA coverage gap (there are, alas too many). Income for the year made him eligible for Medicaid by ACA rules, but income at present was above the minimum allowed for Medicaid. Thanks to snares in Medicaid applications in two states -- he'd moved -- he'd been uninsured for several months, which left him ineligible for a special enrollment period outside of the yearly Open Enrollment. That put him in the short-term market.

Because he is young and healthy, some short-term plans in his region looked okay: premiums in line with what he'd pay for subsidized coverage in the marketplace, with lower deductibles and, most importantly, a cap on out-of-pocket costs comparable to ACA ranges. Offerings from at least three insurers looked fairly comprehensive for someone with no preexisting conditions. Ambulance and inpatient mental health coverage were limited, and all the plans had a $1 or $2 million cap on benefits (banned in ACA-compliant plans), but those risks were all acceptable under the circumstances -- fairly short-term coverage for a period in which ACA coverage was unavailable.

Initially a plan from Pivot Health looked best to me: a relatively low deductible and OOP max for the money -- and, said the brochure:

There are no doctor or hospital network restrictions, so you have the freedom to choose where to receive care.

A somewhat more expensive plan offered by industry giant United Health Care did have a provider network, which under the circumstances seemed a disadvantage, as you'd have to stay in-network to get coverage, and who knew how good the network was.  Louise, however, pointed out that I'd got it backwards:

There are no network agreements on the Pivot plan, so balance billing could/would be an issue with any provider. I don't know how Pivot sets their rates, but "freedom to choose any doctor or hospital" is code for "watch out for balance billing." 

In other words, the plan pays rates that provides are unlikely to accept, and they'll balance bill the enrollee for the difference. Balance billing is a risk with almost any commercial U.S. health plan -- but in these plans, it's a near certainty.

[Update, 11/18: A rep for Pivot Health (plans underwritten by Companion Life)  tells me that this no-network plan type offers a measure of protection from balance billing -- specifically, that a member who is balance-billed can refer the bill to a third party administrator, who will initiate a negotiation process. I am seeking more information as to how much protection that option provides. Pivot also offers plans with a  PPO provider network in some states.]

Another policy with a competitive OOP max and other terms spelled out the balance billing trap -- in a footnote:

*** Balance billing is when the provider is allowed to bill you for the difference between the amount billed by the provider and the amount allowed under your policy. For example, if your doctor bills $100 for your office visit and only $70 is allowed under your policy, your doctor may hold you responsible for the remaining $30. Similarly, if a hospital bills you $2,500 for a hospital visit and $1,800 is equal to the 150% of Medicare allowable expense maximum under your policy, your hospital may hold you responsible for the remaining $700.

I missed that, if I remember right. With Louise's help, however, I recommended the UHC plan to the person I was helping, and he enrolled.

Of course, Louise had covered this in the 'pros and cons' section of the post linked to above (oh hell, here it is again):

You may be subject to balance billing. Some short-term plans tout the fact that you can see any doctor or go to any hospital you want. While that might sound good, it’s also a red flag for potential balance billing. If the plan doesn’t have a provider network, that means the doctors and hospitals that members end up using have not agreed to accept the insurer’s reimbursement rates as payment in full. In that case, whatever amount the insurer pays them (a “reasonable and customary” amount, a percentage of Medicare rates, etc.) is likely to be less than what they billed. And since they do not have a contract with the short-term insurer, they are free to send a bill to the patient for whatever amount the insurance plan doesn’t pay. So even if the plan has a maximum out-of-pocket limit, enrollees should keep in mind that balance billing could potentially result in much higher out-of-pocket costs if the plan doesn’t limit care to a specific network of providers.

How many shoppers are going to absorb that? Not many. And the marketing outreach for these plans is aggressive. For research purposes, I tried one of the commercial sites that comes up when you google health insurance and signed up to look at ACA-compliant plans. It did show me a menu of such plans, though I would have had to let a broker contact me to get subsidy-inclusive price quotes. I also got bombarded with six emails, one touting Medicare Advantage plans (I had put 1981 as a birth date), and one for short-term plans. The latter touted none other than Pivot Health, urging me to

Learn more about high-quality plans from Pivot Health...See any doctor - no networks, with an A+ rated insurance company (rating by A.M. Best). Refer back to your ACA quotes and compare them to your Short-Term Health Quotes. [Links omitted.]

Clever, isn't it?  No false info -- but note how the lack of network is converted to a selling point (which frankly is how I read it cold some weeks ago). A chief selling point (here and elsewhere in the email) is the price comparison with ACA-compliant plans (again, provided in a broad range until you initiate further contact).  And the phone number provided with an invitation to "talk to a broker" is a direct line to Pivot Health.

Because of the shortcomings of the ACA marketplace -- plans are unaffordable for many who don't qualify for subsidies, and not so affordable for a fair number who do qualify -- the short-term market is the best option for some. Louise and other brokers who sold individual market insurance before the ACA marketplace launched are not shocked by the plans' shortcomings, as they were a norm back then.

The Trump administration is promoting this stopgap, however,  in true Trumpian fashion -- creating conditions favorable for the worst actors to hard-sell the worst products. Pivot, and the pitch above, are far from the worst.