Statement to Energy & Commerce Committee on Short-Term, Limited-Duration Insurance

Statement by Margaret A. Murray, CEO, ACAP to the House Committee on Energy & Commerce


Subcommittee on Health Hearing: Strengthening Our Health Care System: Legislation to Reverse ACA Sabotage and Ensure Pre-Existing Conditions and Protections


February 13, 2019

Chairman Pallone, Chairwoman Eshoo, Ranking Member Walden, Ranking Member Burgess, and Members of the Committee:

ACAP is an association of 60 not-for-profit and community-based Safety Net Health Plans (SNHPs) located in 29 states. Our member plans provide coverage to more than 20 million individuals enrolled in Medicaid, the Children’s Health Insurance Program (CHIP), the Marketplaces, and Medicare Special Needs Plans for dually-eligible individuals, including over 765,000 Marketplace enrollees. Sixteen of ACAP’s SNHP members offer qualified health plans (QHPs) or basic health plans (BHPs) in the Marketplaces, including one that newly entered the Marketplace for 2019.

Since the passage of the Affordable Care Act (ACA), ACAP plans have advocated to reinforce each leg of the law’s foundational “three-legged stool”: affordable insurance options, a near-universal risk pool, and meaningful coverage. ACAP plans and many other issuers have embraced these ideals and offered coverage that provides high-value, affordable, and comprehensive care to consumers who had previously been subject to underwriting and other exclusionary practices. Without any one of these “legs,” the rest is not sustainable.  We are concerned that Short-Term, Limited-Duration Insurance (STLDI) health plans threaten the balance of that stool. We appreciate the Committee’s attention to the issue in today’s hearing.

STLDI plans have been available for many years; however, their intended function has fundamentally changed. STLDI plans had historically been used to fill gaps in coverage for a short period of time.  However, they lack comprehensive consumer protections such as pre-existing coverage requirements—not to mention they are permitted to underwrite coverage and even engage in post-claims underwriting and rescissions. Before the ACA, in practice there was effectively no difference between STLDI plans and pre-ACA individual market plans.  As ACA coverage rolled out, however, and market protections such as guaranteed availability came into practice, brokers and issuers of STLDI plans began marketing them as alternatives to ACA coverage instead of as true “short-term” coverage. In response to this changing nature, the Obama Administration issued a regulation in 2016 restricting STLDI plans’ coverage terms to three months or less with renewals of no more than one year. In August of 2018, the Trump Administration changed course and issued a final rule that expands the coverage period for STLDI plans up to 12 months with coverage renewal up to 36 months. Although STLDI plans may be an effective method of stop-gap coverage for consumers with coverage gaps due to changing employment or life situations, these new coverage duration limits permit them to effectively be sold as an alternative to ACA-compliant plans. Yet it should go without saying that much of the goal of the ACA was to curb the abuses like those that STLDI plans regularly engage in—post-claims underwriting, rescissions, and no guaranteed availability to name just a few.

Despite the similar 12-month duration, there are few similarities between STLDI and ACA-compliant coverage. While ACA-compliant plans must have a Medical Loss Ratio (MLR) of at least 80 percent—which requires 80 percent or more of earned premium dollars to be spent on medical care, as opposed to administrative costs and profits—many STLDI plans have an MLR of about 50 percent and moreover there are no MLR ratio requirements that STLDI plans must meet.1 While ACA-compliant plans are required to cover Essential Health Benefits (including maternity care, prescription drugs, and mental health and substance use disorder treatment), STLDI plans are not mandated to do so. And, while ACA-compliant plans are prohibited from underwriting, imposing lifetime and annual limits, and excluding coverage for pre-existing conditions, STLDI plans do not have to follow the same rules.2 Ultimately, for any consumer with significant health coverage needs, whether acute or chronic, STLDI plans do not provide meaningful coverage; for consumers with pre-existing conditions, it is safe to say that STLDI plans are wholly inadequate.


The distinctions between ACA-compliant coverage and STLDI plans are clear on paper, yet the marketing of STLDI plans can prove harmful to well-intentioned consumers. During Open Enrollment for 2019, the growing market for STLDI plans was on full display: a recent marketing scan conducted by the Georgetown University Center on Health Insurance Reforms (CHIR) found that in every state, over half of all results from websites that are designed to suggest appropriate health insurance products to consumers directed them to STLDI or other non-ACA compliant insurance products. In fact, during this year’s Open Enrollment, less than 20 percent of CHIR’s searches including phrases like “cheap health insurance” or “ACA enroll” returned sites offering solely ACA-compliant coverage.3 Or in many cases the STLDI plans themselves are guilty of misleading consumers.  For example, one issuer recently introduced a product that does cover some pre-existing conditions—but with a maximum coverage limit for pre-existing condition claims of $25,000—which is less than the average cost of a three-day hospital stay.4  Or, there is the case of Agile Health Insurance’s “Everest Prime STM” product, which features a marketing brochure with climbers summiting a mountain, yet the plan specifically excludes coverage for injuries related to mountain climbing.[5]  Or the regular practice by STLDI plans of considering pregnancy a pre-existing condition, even if the consumer was not yet aware of the pregnancy.  Likewise, there are policies within the fine print that any conditions developed during the first 12 months of coverage (the coverage term) will be considered pre-existing conditions for any subsequent terms within the 3-year renewal period (and thus would no longer be covered).

These data and examples demonstrate that despite many consumers’ initiatives to purchase more comprehensive, ACA-compliant coverage, it may be difficult for them to know what they are purchasing and may effectively be duped into purchasing STLDI coverage when they need something more comprehensive. Or, a consumer may not fully understand the potential impact of purchasing an SLTDI product, particularly consumers that don’t realize they have a pre-existing condition or what an STLDI plan might deem a pre-existing condition.

For example, a woman in Illinois went to the hospital with heavy vaginal bleeding resulting in a five-day hospital stay and a hysterectomy, only to be denied coverage under her short-term plan on the ground that her menstrual cycle constituted a pre-existing condition. Additionally, a man in Washington, D.C. also purchased a short-term plan with a stated maximum payout of $750,000; when he sought coverage for a $211,000 bill resulting from a hospitalization, he was paid only $11,780, in part due to a denial of coverage based on his father’s medical history.  While these may be particularly egregious examples, they demonstrate unscrupulous nature of STLDI plans, which generally engage in whatever practices necessary to avoid paying claims. One of the easiest ways to do so is to deem the claims as related to a pre-existing condition.

Finally, the proliferation of STLDI plans will have a deleterious impact on the risk pool and the stability of the health insurance Marketplaces. STLDI plans cost less money because they offer less coverage. These plans are expected to pull healthier and younger consumers out of the ACA-compliant individual risk pool, effectively segmenting risk in the individual market. The marketing research above further demonstrates that STLDI plans will not only be attractive but also readily available to consumers moving forward. To better understand the effect of STLDI plans on the individual market, ACAP commissioned the actuarial firm Wakely Consulting Group to model the impact of the Administration’s proposed rule.6 Wakely estimated that in 2019, adverse selection would decrease enrollment in the ACA-compliant individual market by between 400,000 and 790,000 enrollees. In addition, Wakely estimated that STLDI plans, in tandem with the repeal of the individual mandate, will contribute to a rise in premiums of up to 12.8 percent and a reduction in enrollment of up to 26.3 percent in the individual market over the course of 4 to 5 years. For ACAP plans and others offering comprehensive QHP coverage that covers pre-existing conditions, they will essentially become high risk pools.  This landscape is unsustainable; if ACA-compliant plans are forced to exit the Marketplaces, fewer affordable, comprehensive health insurance options will remain.


It is for these reasons that ACAP decided to file suit about this Administration’s short-term, limited-duration insurance regulation.  As noted above, the regulation effectively permits the exact type of plan the ACA was intending to outlaw to be sold in direct competition with ACA-compliant plans. We believe this is an inappropriate interpretation of the law. Regulations are intended to carry out law, however, in this case, the regulation is undermining the law and the ability of plans like ACAP’s member plans to offer comprehensive, ACA-compliant coverage.



In conclusion, ACAP thanks you for the opportunity to provide feedback to the Committee and for your efforts to ensure protections for consumers with pre-existing conditions and other vulnerable populations. ACAP and its member plans are dedicated to serving Marketplace enrollees, including those with pre-existing conditions and we appreciate the Committee’s attention to this important issue. We look forward to providing with additional feedback or guidance. Please contact Heather Foster, Vice President of Marketplace Policy ( or 202-204-7510) with any questions or for additional information.

[1] Huth, Erik and Karcher, Jason. “The short-term/limited-duration insurance rule and the potential impact on health insurance markets.” Milliman. August 2018; National Association of Insurance Commissioners. “2017 Accident and Health Policy Experience Report.” 2018.

[2] Lucia, Kevin et al. “State Regulation of Coverage Options Outside of the Affordable Care Act: Limiting the Risk to the Individual Market.” The Commonwealth Fund. March 2018.

[3] Corlette, S. et al. “The Marketing of Short-Term Health Plans: An Assessment of Industry Practices and Regulatory Responses.” Georgetown University Health Policy Institute. January 2019.

[4] Palanker, Dania. Declaration of Dania Palanker in Support of Plaintiffs’ Motion for Preliminary Injunction, Association for Community Affiliated Plans et al v US Department of Treasury 

[5] Modern Healthcare, May 7, 2018, p. 36

[6] Cohen, M. et al. “Effect of Short-Term Limited Duration Plans on the ACA-Compliant Individual Market.” Wakely Consulting Group. 2018.