By federal order, Iowans will soon have another health insurance option that won’t be subject to the requirements of the Affordable Care Act. It’s called short-term limited duration insurance. Some critics see it as another way for the Trump administration to kill Obamacare by a thousand cuts. Now Iowa’s insurance commissioner is at odds with a statehouse committee over what kind of consumer protections to require.
Currently, the limited duration coverage can be purchased for up to three months, and it’s meant to cover short-term need, for example, being in-between jobs.
Officials with the Iowa Insurance Division say there are some bad actors out there selling the plans mostly online or over the phone.
“Our office gets all kind of complaints from consumers who think they’ve signed up for a plan that is going to offer hospitalization or prescriptions and when they actually have a claim they find out that what they signed up for doesn't have anything,” Insurance Specialist Andria Seip with the Iowa Insurance Division recently told the legislature’s Administrative Rules Review Committee.
Now, with a recent Trump administration order, more people may be seeking the coverage. The order will allow the policies to be sold for up to 12 months, renewable for up to three years. The Iowa Insurance Commissioner wants to put a benefit floor in place to protect consumers. However, he’s hit a wall with the Rules Review Committee. And he warns there’ll be some “real junk” out there if something isn’t done.
At the recent meeting of the committee, Republicans opposed the benefit floor the commissioner proposes.
“We are requiring a minimum level of benefits for those plans beyond 90 days,” Seip said.
“Which is more restrictive than the federal rules,” Rep. Guy VanderLinden, R-Oskaloosa, countered.
“From my perspective I see it as a consumer protection,” Seip replied. “You see it as restrictive.”
“What about the people who don't want the benefits that Iowa rules would require?” Vander Linden responded. “What about that person?”
Under the proposed rules, the plans would include some limitations to make them more affordable, but would basically cover what regular individual health insurance covers, from maternity care to mental health. Republicans on the committee argued that will kill competition.
“Because as you know as you add mandates and different coverages then that increases the cost of the product,” said committee co-chair Rep. Dawn Pettengill, R-Mount Auburn. “The whole purpose of the federal rule was to allow more competition in the market.”
At their meeting on September 11, the Rules Review Committee turned down a request by the insurance division to adopt proposed new rules on an emergency basis since the new program starts October 2. Now Insurance Commissioner Doug Ommen is going back to the drawing board with lawmakers to try to reach agreement on the benefits.
“We’re trying to make sure that what short term plans are offered here are good, comprehensive in a traditional sense, although not fully in compliance with the ACA requirements but that they’re affordable and real insurance and providing real coverage and real protection,” Ommen said.
Ommen says he doesn’t object to expanding the limited duration plans. His office petitioned the federal government to extend the short term policies to help the thousands of Iowans who are priced out of Obamacare. But he argued for letting states regulate the plans.
Ommen believes he will reach agreement with the committee on the regulations.
“I’ve had a conversation with Mr. Ommen and told him what my objections were, and I think they’re working on it,” Pettengill said.
Ommen says one thing to settle is how to handle pre-existing conditions or other limits on coverage. He points out that anyone selling the plans must get approval from his office, but he needs the “teeth of regulation” to start denying the applications.
“I will use the tools I have available to give every filing careful review, but ultimately in the not too distant future I will be in the position of allowing the sale of products without the protections that consumers should have,” Ommen said. “For those who are currently uninsured, they could be subject to the sale of some junk plans between now and the time we are able to put regulations in place.”
Ommen says it’s too early to say how many Iowans may take advantage of the longer-term policies. But he advises everyone not to buy insurance over the phone or online without talking to an expert.
“Frankly, any individual that is looking at these type of plans would be well-advised to speak to an insurance producer, an insurance agent to make sure that what it is they're purchasing fits their particular needs,” Ommen said.