So I haven’t blogged in a while, but today I read something that I just found appalling. I read an opinion piece in the Chicago Sun Times by Illinois State Senator Heather Steans ( Democrat Chicago’s 7th District). In her opinion piece she stated she introduced Senate Bill 2388, which would restrict Illinois consumers from buy short term medical policies and she referred to them as “junk” policies. See article
I am not sure if this reference is based on emotion, but it is certainly not fact. A short term policy which April of 2017 could be sold up to 12 months in many states some were up to six months. In 2017 it was made they could only be offered for three months at a time.
Short term plans are generally underwritten, just like a life insurance or auto insurance policy. They exclude Pre-existing conditions and are in most cases only covering catastrophic claims. That does not make it junk. It makes it insurance. Insurance prior to the Affordable Care Act was always based on risk to the insurance carrier, and were designed to pay for things you could not pay for. Let’s look at your auto insurance. Younger drivers are usually charged more, even though they have never had a accident, because a new driver is a higher risk. Also, your auto insurance does not cover “preventive care” such as an oil change. Health insurance used to be that way. They was a “standard” rate, sometimes plans were rated for some medical conditions such as a thyroid condition or high blood pressure, and you could be denied coverage for some pre-existing medical conditions. One thing that seems to be a common misconception is that you could NOT be cancelled once you got sick. The only way you were ever cancelled is if you hit a lifetime or annual maximum. That was usually $1 million per year and a $5 million lifetime. Those were generally not hit except for cases with a chronic illness or a child that was born with a disability of some sort.
Health insurance major medical plays covered many of what are not considered essential benefits. All covered hospitalization, emergency room and outpatient services. Most plans came with prescription coverage, some it was an option to take it or not. Mental health coverage was sometimes an option. Maternity coverage was the big one that was missing from some carriers. Many offered it as an option that had to be purchased at the time of the policy and had a 12 month waiting period usually. Some carriers did not offer it at all.
Let me remind you we are talking about health insurance on the individual market, which is usually purchased by someone who is self employed, we are talking about 12 % of Americans who purchase these plans. These are also people who do not get their company to subsidize the cost. Many of these folks do not need doctor visit coverage, because when you are self employed, if you are not working you are not getting paid, so you do not have time to go to the doctors because you have a sore throat. My Blue Cross and Blue Shield plan was cancelled because it was considered Junk. It was an HSA plan with a $5000 deductible for the family then 100% coverage. I paid everything up to $5000. It did not have preventive care. I am ok with that, I can pay a few hundred dollars if I need to. It did not have maternity coverage, my family is beyond the child bearing years. It was affordable, it was under $400 per month for my family of four. Those days are gone now. That same plan cost almost $1400 per month AND has a family out of pocket maximum of $13,000. My plan that was considered junk was better for me and my family’s needs, then the current ACA offerings. Members of the house and senate on both the state and local level, should be forced live under the same insurance that its citizens live under. They would then get a better understanding of the pain that the ACA has caused and how insurance actually works.
Thanks for Reading
Eric Wilson is President of I Sell Health, Inc a Chicago area health insurance agency,