On July 22, 2019, the National Association of Insurance Commissioners (NAIC) released a report titled “2018 Market Share Reports for the Top 125 Accident and Health Insurance Groups and Companies by State and Countrywide.” Analyzing cost and market share trends among health plans, the report revealed that several short-term plans provide very little value in exchange for premiums paid.
This report found that short-term plans have very low “medical loss ratios” (MLR), which measure the value that health plans deliver to enrollees by comparing the dollar amount of premiums charged to enrollees and the total amount of money that the plan spent on medical care for those enrollees. Because short-term plans are not required to comply with the coverage requirements of the Patient Protection and Affordable Care Act (ACA), these plans typically spend much less on medical care for enrollees, which leads to lower medical loss ratios. The average medical loss ratio of the top five health insurers that offer short-term plans was 39.2 percent, but one insurer had a medical loss ratio as low as 9 percent. This means that for every dollar that the insurer charged in premiums, only 9 cents was spent on medical care for enrollees. Because these plans do not have to comply with the ACA’s medical loss ratio requirements, these plans are able to use the unspent money on administrative expenses or retain it as profit. If these plans were subject to the ACA’s MLR requirements, they would have to pay rebates to enrollees equal to the difference between the plan’s medical loss ratio and an 80 percent medical loss ratio.
Interested in learning more? Review Modern Healthcare’s article on the topic.