Reducing The Externalities Caused By Limited Benefit Plans

Limited benefit or non-Affordable Care Act (ACA)-compliant health insurance products are much discussed of late, since a proposal to ease restrictions on short-term health plans is currently under consideration. Critics have argued that these plans hurt both consumers and the individual market, while defenders have suggested that those who can benefit from this competitively priced option should be free to do so. That these plans may be harmful to at least some consumers is difficult to dispute. In its comment letter, the National Association of Insurance Commissioners supported increased disclosure requirements, noting that many consumers reported feeling “confused or misinformed when they purchased a policy that appeared similar to a major medical policy,” but in important ways was not. Yet evidence of harm to consumers is neither necessary nor sufficient to make the case that limited benefit plans are bad for the market. In the absence of the limited benefit option, some consumers might not buy insurance at all, while others might purchase ACA-compliant plans. That decision breakdown is not known, but what we know about the size of the limited coverage market suggests that the base may not be trivial. The limited coverage segment is hard to measure, since it includes many different products, some of which are designed to supplement group coverage. But enrollment in a few of the major categories, including noncomprehensive, short-term, and “other” individual coverag...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Insurance and Coverage ACA-compliant market individual market stability limited benefit plans short-term plans skinny plans state insurance regulation Source Type: blogs