Substandard: Non-compliant plans bring pre-ACA problems to the insurance market

A number of insurance and insurance-like models now being marketed have reduced patient protections in the name of affordability.

At a time when the COVID-19 pandemic has added to to stress, depression, and substance abuse problems in the U.S., the shortcomings of these plans can be especially challenging for those seeking treatment for mental health issues.

The move toward less-regulated health insurance plans has created a new set of risks for consumers and patients, according to a new report.

The report, released by a coalition of 30 health care-related organizations, addressed the growth of “non-compliant and substandard” health insurance products—many of which do not comply with Affordable Care Act (ACA) insurance regulations.

During the Trump Administration, several regulatory changes were made to allow more flexibility for insurance products that, for example, can restrict coverage for pre-existing conditions. The Trump Administration said ACA rules needed to be rolled back to make insurance products more affordable. Many of the plans outlined in the report are indeed less expensive—but they also cut back on coverage, leaving patients stranded if they have an unexpected illness or injury.

Related: Short-term health and agents star at House ACA hearing

“Allowing these plans to remain on the market effectively turns back the clock to the days when insurers could reject people with pre-existing conditions, exclude coverage for specific diseases and hike premiums based on an individual’s medical history, gender, or age without limits,” the coalition said in a release.

A step backwards

The coalition represents many organizations, such as the American Cancer Society, the American Diabetes Association, and the American Lung Association, which have fought for consumer protections, especially for patients with chronic conditions. The groups list a number of insurance and insurance-like models now being marketed that have reduced patient protections in the name of affordability.

The models include:

The report also noted that some large-group coverage arrangements exploit loopholes in the federal ERISA laws to skirt ACA regulations. The report said that some forms of plans in this area present risks to consumers and can result in substandard coverage for enrollees.

“Non-compliant plans, which include STLDIs and others, are allowed to openly and legally discriminate against people with pre-existing conditions. Additionally, insurance-like products, such as limited-indemnity plans, Farm Bureau plans, HCSMs and multiple employer welfare arrangements (MEWAs), go entirely unregulated at the state and federal levels,” the report noted. “This lack of regulation allows these insurance-like products to utilize misleading and deceptive marketing practices, ignore essential patient protections, and charge patients with pre-existing conditions, older individuals and women higher premiums for their products, if they are allowed to purchase a plan at all.”

Mental health exclusions

At a time when the COVID-19 pandemic has added to to stress, depression, and substance abuse problems in the U.S., the shortcomings of these plans can be especially challenging for those seeking treatment for mental health issues.

According to the National Alliance on Mental Illness (NAMI), one of the groups in the coalition, substandard plans can reject applicants due to their mental health conditions, charge people with mental health conditions more, exclude coverage for pre-existing conditions, and refuse to cover mental health and substance use benefits.

“These plans put people with mental health conditions at a greater risk for increased out-of-pocket costs, insufficient coverage, financial instability, and unmet health needs,” NAMI said in a statement. “The new report details the specific harms of many types of non-compliant health plans and urges federal policymakers to take immediate steps to protect people by limiting their expansion.”

Some of the policy recommendations put forward by the report include:

Read more: 

Recommended Stories