APA, Others Battle Trump Policy of Extended Use of 'Junk' Insurance

Kerry Dooley Young

August 01, 2019

A coalition of health groups is continuing its legal challenge to the Trump administration's policy that allows extended use of short-term medical insurance plans.

The groups contend these "junk" plans put consumers at risk of being unable to afford care if they fall seriously ill, despite having purchased insurance.

The American Psychiatric Association (APA) is part of this coalition, which, on Monday, filed an appeal to a July 19 ruling from Judge Richard Leon of the US District Court for the District of Columbia.

Leon found against arguments presented by the APA and other members of the coalition in a 2018 court filing. Instead, Leon effectively supported the Trump administration's expansion of short-term plans.

Short-term plans with skimpier benefits were designed to cover individuals during coverage gaps, critics say. However, the Leon decision ruled the Trump administration was within its rights to last year allow sales of these plans for terms of just short of a year, with an option for two renewals. The total duration for a short-term plan is about 36 months under the Trump rule, Leon said.

Leon's ruling will put people with mental illness at risk, said APA president, Bruce Schwartz, MD.

"These plans could be catastrophic for many Americans with mental illness or substance use disorders if these disorders are excluded from coverage," Schwartz said in a statement. "Patients have complex medical needs and rely on strong, predictable insurance protection and care."

Short-term insurance plans are intended to appeal to those who believe they do not need insurance, meaning they are pitched heavily to those in their 20s.

The APA spelled out the risk for these younger individuals in the original lawsuit filed last year. Many psychiatric conditions are first diagnosed when individuals are in their 20s, the APA noted in the suit.

Unable to Meet Duty of Care

"Psychiatrists treating younger patients whose illness blossoms into a more serious mental illness will likely find that treatment for these illnesses is not covered by" a short-term plan, APA noted in the 2018 suit.

"There will be little ability to transition these patients when their insurance does not cover the necessary medications and treatments," the APA added in that 2018 legal filing. "The psychiatrist is then significantly constrained in his or her ability to provide usual and customary care to patients and to meet their duty of care."

The Association for Community Affiliated Plans (ACAP) is the lead party on this legal challenge. In addition to APA, another five groups have joined ACAP in this suit. They are the National Alliance on Mental Illness, Mental Health America, AIDS United, National Partnership for Women and Families, and Little Lobbyists, a group that describes itself as an advocate for children with complex medical needs.

In his July 19 decision, Leon recapped how federal short-term insurance regulations evolved from the enactment of the Health Insurance Portability and Accountability Act of 1996.

In 2016, the Obama administration reduced the maximum term for these short-term plans from less than 12 months to less than 3 months, effectively prohibiting renewals.

The move was intended to prevent insurers from siphoning off healthier customers who would be attracted to cheaper plans with skimpier coverage. The short-term plans do not have to fulfil the mandates of the Affordable Care Act of 2010.

In 2018, the Trump administration finalized a rule that reset the cap for short-term plans. This was described as an effort to promote competition in the markets, Leon said.

In the original suit filed in 2018, ACAP and its partners had noted that consumers take on serious and often unappreciated risk with the short-term plans.

In the filing, they said agents for insurers sometimes mislead people about what short-term plans cover. Consumers may not realize the limits of the plans they are buying.

Menstruation a Pre-existing Condition

"This mistake can have devastating consequences," ACAP, APA, and their partners said in the lawsuit.

They cited the example of an Illinois woman who went to the hospital with heavy vaginal bleeding resulting in a 5-day hospital stay and a hysterectomy. She was denied coverage because her menstrual cycle constituted a pre-existing condition.

In the original suit, ACAP, APA, and the other groups also cited the case of a Washington, DC, man who paid for a short-term insurance plan with a stated maximum payout of $750,000.

But "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," ACAP and its partners said in the suit.

As previously reported by Medscape Medical News, several states have moved to block or limit use of short-term insurance plans.

California effectively banned long-term use of short-term plans in 2018. The state's Attorney General Xavier Becerra has called them "stripped-down, junk health insurance plans that don't provide the reliable, comprehensive coverage families need when an emergency occurs leading to bankruptcy."

Based on a January 2019 report produced by the Robert Wood Johnson Foundation and the Urban Institute, the Colorado, Florida, and Maine insurance departments issued public advisories to help consumers better understand short-term plans.

Officials in other states also are concerned about how short-term insurance is marketed to consumers, the report said.

"Regulators agreed that several common industry practices pose risks to consumers seeking, or enrolled in, short-term health plans, including coverage denials because of health status, refusal to cover services because of a pre-existing condition, the rescission of coverage for enrollees with certain medical claims, and surprise balance billing because of a lack of in-network providers," the report said.

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