A recent Kaiser Family Foundation report stated that there were “big gaps in the benefits” of short-term health insurance plans. This has been cited as a negative in many subsequent reports of this finding.
But in reality, it is these “gaps” that make short-term health insurance affordable.
Yes, the report is accurate that 43 percent of short-term health insurance plans do not cover mental health, and that 71 percent do not cover prescription drugs. However, many Americans don’t want or need those specific coverages. The ability to forgo them is what makes their insurance affordable.
With open enrollment almost upon us, it is important that consumers understand their options. American health insurance consumers are a lot like American car buyers. Their needs, wants, and desires are extremely eclectic.
Imagine the consumer who needs a car to get to work. Would the consumer enjoy one fully-loaded, with leather seats, premium stereo, and four-wheel drive? Of course. Having all those options can be useful. But if the consumer doesn’t live in mountainous or snowy terrain, does she need four-wheel drive? And if the consumer cannot afford the fully-loaded vehicle, should he forego a car altogether or purchase what he can afford?
Similarly, many health insurance buyers in the Affordable Care Act marketplace have opted to go without health insurance because they could not afford it. The only option they had was to buy a plan with all the options (10 essential health benefits), which made the overall policy too expensive. It is nice to have all the options, just in case. But in reality, many people cannot afford fully-loaded ACA plans. And there are still 28 million Americans without health insurance.
A single male or a postmenopausal female do not need maternity coverage. There are many others who do need it or need some other essential coverage, such as mental health. However, if we want to reduce the number of uninsured Americans, we need to allow people to buy their health insurance like they buy their cars. Americans want options.
Short-term health insurance is not a replacement for ACA health plans. It is a complementary product. ACA health plans have helped millions of Americans, but so have short-term health plans. Everyone is unique, and health insurance needs will vary.
At AgileHealthInsurance.com, we help people find affordable health insurance that fits their specific needs. In one case, we helped a 63-year-old Montana man who needed an affordable solution to bridge him to Medicare. He was a healthy person who took a couple of maintenance drugs. The least expensive ACA bronze health plan — it had a deductible over $7,000, by the way — would have cost cost him about $830 per month. But he could get a short-term health insurance plan with a $5,000 deductible for about $230 per month.
Yes, the short-term plan did not have prescription drug coverage. But his prescriptions were generics, so he saved a lot of money with the short-term plan, paying $30 out-of-pocket for his medication. Why would someone on a fixed income want to pay almost $600 per month for a lot of coverage they do not need? That’s a car payment, and then some!
In another case, we helped a 33-year-old woman from South Florida who made “too much money” to qualify for a subsidy. The least expensive ACA health plan in her county (Miami-Dade) was almost $280 per month — again, with a deductible of over $7,000. A short term health insurance plan with a $5,000 deductible cost her about $120 per month. Even after paying the tax penalty (which goes away next year), she is economically better off by more than $1,000 per year.
That’s real money to a lot of Americans.
The current political debate on health insurance reform takes an all-or-nothing approach. At AgileHealthInsurance.com, we believe that both ACA health plans and short-term health insurance plans are vital to reducing the number of uninsured Americans. The ACA plans provide a “fully loaded Cadillac” product while the short term plans allow people to select the specific options they need and can afford.
Americans want choices, and together these products provide a wide range of coverage options that allow a larger number of people to obtain the plan that fits their needs. It will hopefully reduce the uninsured rate in our country. Because after all, isn't that the real goal that we should be striving for?
Shaun Greene is Senior Vice President and General Manager of AgileHealthInsurance.com.