E&C Launches Investigation into Companies that Sell or Broker Junk Health Insurance Plans
Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ), Health Subcommittee Chairwoman Anna G. Eshoo (D-CA) and Oversight and Investigations Subcommittee Chair Diana DeGette (D-CO) today began an investigation into the concerning practices of Short-Term, Limited Duration Insurance (STLDI) health care plans and insurance brokers by requesting documents and information from twelve companies that either sell or assist consumers in signing up for these junk plans.
“The Committee on Energy and Commerce is conducting oversight of STLDI and companies that sell STLDI plans,” the Democrats wrote. “The Committee’s initial examination of these plans has yielded disturbing information about how insurance companies that sell STLDI discriminate against individuals with pre-existing conditions and put consumers at significant financial risk.”
The Committee leaders continued, “Additionally, we are troubled that consumers who sign up for these plans are being misled about the nature of the coverage they are purchasing. Consumers are being denied coverage even for medical care that is rightfully covered under the terms of their contract, through a process known as post claims underwriting. As such, we request further information about the plans your company is offering and about these industry practices.”
In the letters, the Democrats cite concerns over several troubling reports of STLDI plans denying coverage entirely, charging more based on age, gender or health state, or refusing to cover consumers for care that may stem from what the company deems a pre-existing condition. In one example, a company refused to pay for a consumer’s cancer treatment leaving him with $800,000 in medical bills. The insurer deemed the beneficiary’s cancer diagnosis a pre-existing condition, even though he was diagnosed with cancer after he enrolled in the STLDI plan.
The Committee leaders also noted their concerns with accounts of consumers being misled by insurance brokers and agents about whether the plans they are signing up for comply with the Affordable Care Act’s (ACA) comprehensive consumer protections. According to a study from the Georgetown University Health Policy Institute, insurers and brokers selling STLDI plans engage in deceptive marketing tactics that can mislead consumers about the nature of the insurance policy they are purchasing, and often fail to provide consumers with detailed information on the medical services and benefits excluded from the plan’s coverage.
On August 3, 2018, the Trump Administration issued a final rule to expand the availability of STLDI plans. The final rule extended the maximum duration of STLDI plans from three months to up to 12 months and allows insurers to renew STLDI plans for up to 36 months. The final rule also allows STLDI plans to be sold alongside insurance plans that comply with the ACA’s consumer protections, resulting in a parallel market that exposes consumers seeking comprehensive coverage to increased premiums and greater risk. The Trump Administration further incentivized consumers to purchase junk STLDI plans by allowing states to direct advanced premium tax credits to STLDI plans in an October 2018 guidance on 1332 waivers.
As part of the investigation, the Committee leaders are requesting documents and responses to a series of questions from each of the companies, including:
- All documents provided to applicants seeking to purchase your company’s STLDI plans, including plan applications, all underwriting documents, and health questionnaires that applicants must answer about their health status and medical history.
- What percentage of applicants are denied coverage for these policies?
- An explanation of how your company markets STLDI plans to consumers, and copies of marketing materials and plan documents for STLDI plans offered in each state in which you sell these plans.
- Information on how much commission STLDI insurers pay to agents and brokers for STLDI plans.
- A written explanation of whether and how your company conducts post-claims underwriting on STLDI plans, including what constitutes a pre-existing condition under your company’s policy.
- Have you received complaints from consumers or from insurance regulators in any state about deceptive advertising?
The letters sent to each of the companies are available below:
Update: As the Committee leaders continue their investigation, two additional letters were sent to Pivot Health and LifeShield National Insurance Co. on March 18, 2019. The letters are enclosed below: