I’ve never admitted to my doctor that I drink or smoke — not even after the Affordable Care Act made it so that insurance companies couldn’t deny you coverage based on any pre-existing conditions.
Given the history of health insurance in this country, it seemed like that provision was too good to be true and would never last. And sure enough, in June — in the midst of a pandemic no less — “the Trump administration doubled down on its stance that the Affordable Care Act, or Obamacare, should be struck down in its entirety by the Supreme Court,” per a report in Fortune. According to the same article, if the Supreme Court did in fact revoke the landmark legislation, health insurers could technically consider COVID-19 a preexisting condition, and therefore, raise a person’s premiums if they’re a survivor of the virus.
To be clear, as things currently stand, “it’s illegal for health insurers to ask you about your preexisting conditions when you apply and to treat your application differently based on your preexisting conditions,” Karen Pollitz, a senior fellow at the Henry J. Kaiser Family Foundation tells me. “But like any other health condition, just the history of having COVID is certainly something that before the Affordable Care Act, could have turned into a black mark on your record. And it certainly could have made you vulnerable.”
In fact, prior to the passage of the Affordable Care Act, anything you can think of from acne to hay fever to cancer to HIV could be considered a preexisting condition whereby you could be required to pay more for health care or outright denied coverage. “If you had the flu when you were buying a policy, before the Affordable Care Act, they might ask you to pend your application and wait until you got better and then consider your application,” Pollitz explains.
All that said, there are still policies sold today — primarily short-term policies — that could more or less deny coverage to a COVID survivor. “We kind of hoped that those were fading away and that they’d become relics and no longer matter in our coverage system,” says Pollitz. “But since 2017, the Trump administration has been promoting them and encouraging people to buy them instead of marketplace coverage or to at least consider the option of buying these policies instead of Affordable Care Act compliant policies.”
The upside of short-term policies is that they’re often cheaper than other Affordable Care Act regulated policies. The downside is that they’re cheaper because they’re much less likely to pay your claims. “They’ll cancel your coverage if you get sick,” Pollitz tells me. “Your coverage is only guaranteed for the short-term. So if you were to have one of these policies and you got COVID and you landed in the hospital, even if you’re still in the hospital when the policy expires, that’s it, you’re out.”
According to The Commonwealth Fund, “There have been multiple stories of delayed payments and denied claims — including a man left with $35,000 in medical debt because his short-term insurer said his diagnosis of heart failure and diabetes qualified as preexisting conditions, another whose coverage was canceled six days before heart surgery and one whose short-term insurer withheld $43,000 for cancer treatment claims for six months as it reviewed his medical history.”
Moreover, short-term plans are specifically excluded from the new COVID-19 response law, which makes it so that all services related to coronavirus testing are fully covered by the insurers.
Unsurprisingly, it’s impossible to know how many of these policies are out there since they’re not required to report any data. “I’ve seen estimates of a million or a couple million, but those are just educated guesses,” Pollitz says.
Per the same Commonwealth Fund report, because short-term policies are often sold by out-of-state associations, one state can simply assert that it doesn’t “have the authority to regulate plans sold by out-of-state associations and could only require reporting by insurers licensed within the state.” Which, in turn, makes regulation impossible to accomplish at the state level.
The other issue with regulating short-term health insurance policies is just how much money there is to be made from them. “They pay high commissions to the agents and brokers that sell them,” Pollitz tells me, meaning there’s a major incentive to push them because while they don’t collect much in the way of premiums, they pay out far less in claims. “So chances are you’re putting money in that you’ll never get back,” Pollitz continues.
Why then would anyone want a short-term policy to begin with — beyond the fact that they’re seemingly cheaper than everything else on the market?
It’s simple, they’re sold year-round. “For major medical insurance, you have to sign up during open enrollment,” says Pollitz. “So it’s generally not available year-round unless you have a qualifying event like getting a new job or getting married. These short-term policies, you can go out and buy one tomorrow, if you want. They’re always for sale.”
Let’s just hope that all the other corners they’re allowed to cut don’t become law of the land once more, too.