What GAO found
One option that may be available to those who lose their job with employer-sponsored insurance (ESI) during the COVID-19 pandemic are short-term plans that can cover certain health costs. These plans are generally not subject to federal requirements for individual health insurance coverage established by the Patient Protection and Affordable Care Act (PPACA), such as limitations on the basis of premiums based on existing health conditions and the requirement to cover 10 major health benefits. The federal requirements for short-term plans are mainly limited to determining their duration – the length of time the user can be covered by them. States have broad powers and discretion in regulating short-term plans, and the regulation of short-term plans varies from country to country. For example, some states have banned their sale, and some have imposed restrictions in addition to federal requirements.
GAO found that limited and inconsistent data hindered the understanding of the role of short-term plans during the COVID-19 pandemic for those who lost ESI, such as whether they were used by consumers as temporary coverage or as a long-term alternative to PPACA-compliant plans. . Policy researchers and representatives of national organizations interviewed by GAO said there was a lack of comprehensive data and information on short-term plans, including data on how many people enroll in them and for how long. In addition, data collected for short-term plans varies across the six states reviewed by GAO.
- Two states had no short-term enrollment data.
- Three states report fewer than 10,000 enrollments in short-term plans, and trends vary as to whether enrollment increases or decreases.
- One country has not proposed short-term plans from 2019 to 2021.
Government officials in the five states with plan sales were unable to report on the role of short-term plans for consumers, as none of them collected data on the duration of coverage of short-term plans.
Opinions differ significantly on the value of short-term plans for consumers. Officials from two of the six states reviewed by GAO and other stakeholders interviewed said that short-term plans meet an important need for certain consumers who lost ESI during the COVID-19 pandemic. They said short-term plans provide additional opportunities for certain consumers, such as those who need temporary insurance until they re-hire and those who cannot afford insurance premiums for PPACA-compliant plans. In contrast, officials in two other countries and some other policy researchers said short-term plans did not provide good value for consumers. While most GAO interviewees said that short-term plans often have lower premiums than PPACA-compliant plans, some also point out that short-term plans (1) provide fewer benefits, (2) are not available to those with existing ones. conditions and (3) may lead to higher overall costs for some users than PPACA compliant plans. In addition, unlike PPACA-compliant plans, short-term plans are not subject to federal requirements to provide consumers with key information about their benefits that would facilitate comparison with other options.
Why GAO did this study
Millions of Americans who lost their jobs during the COVID-19 pandemic also lost their ESI. Short-term planned insurance was one of the options for these consumers. However, these plans may differ significantly from other health coverage options for those who lose ESI. That is why it is important to understand the role they play in the market and for individual consumers.
The GAO was responsible under the Coronavirus Aid, Aid and Economic Security Act to monitor the federal government’s pandemic response. In this report, GAO describes what is known about short-term plans and the role they could play for those who lost ESI during the pandemic. Stakeholders’ views on the value of short-term plans to meet consumer needs are also discussed.
GAO conducted a literature search and review of short-term research studies and conducted interviews with national organizations such as the National Association of Insurance Commissioners. GAO also interviewed seven policy researchers selected to include different policy perspectives and stakeholders. This includes (1) employees from six government insurance departments selected to represent different levels and types of regulation, and (2) representatives from four organizations that sell short-term plans.
Contact John E. Dicken at (202) 512-7114 or [email protected] for more information.