30 Health Organizations Issue Report Entitled 'Under-Covered – How “Insurance-Like” Products Are Leaving Patients Exposed'

WASHINGTON, March 29 -- The AIDS Institute has issued a 26-page report dated March 2021, entitled: "Under-Covered: How "Insurance-Like" Products Are Leaving Patients Exposed".

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The co-authors are The Alpha-1 Foundation, ALS Association, American Cancer Society Cancer Action Network, American Diabetes Association, American Heart Association, American Kidney Fund, American Liver Foundation, American Lung Association, Arthritis Foundation, Asthma and Allergy Foundation of America, Cancer Support Community, Chronic Disease Coalition, Cystic Fibrosis Foundation, Epilepsy Foundation, Hemophilia Federation of America, JDRF, The Leukemia & Lymphoma Society, Mended Hearts & Mended Little Hearts, Muscular Dystrophy Association, National Alliance on Mental Illness, National Hemophilia Foundation, National Kidney Foundation, National Multiple Sclerosis Society, National Organization for Rare Disorders, National Patient Advocate Foundation, Pulmonary Hypertension Association, Susan G. Komen, United Way Worldwide and WomenHeart: The National Coalition for Women with Heart Disease.

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Executive Summary ... 4

Recommendations at a Glance ... 6

Recommendations for Congress ... 6

Recommendations for Federal Agencies ... 6

Recommendations for States ... 7

Introduction ... 8

Inventory of Non-Compliant and Non-Comprehensive Coverage ... 10

Short-Term, Limited-Duration Insurance ... 10

Sam Bloechl (Lemont, IL) ... 10

Andrew Blackshear (Benicia, CA) ... 11

Katrina Black (Austin, TX) ... 12

Heath Care Sharing Ministries ... 14

Jill Baine (Spring, TX) ... 15

Megan Martinez (Dallas, TX) ... 16

Farm Bureau Plans ... 17

Grandfathered Plans ... 19

Coverage Arrangements Subject to ERISA ... 19

MEWAs and AHPs ... 19

Spurious "Single-Employer Self-insured Group Health Plans" (Data Marketing Partnership Scheme) ... 21

Minimum Essential Coverage-Only Plans ... 22

Excepted Benefit Plans ... 23

Ali Middlesworth (Fenton, MO) ... 23

Conclusion ... 25

Acknowledgments ... 26

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EXECUTIVE SUMMARY

Our organizations represent millions of patients and consumers across the country who live with serious, acute and chronic health conditions. These individuals need access to comprehensive, affordable health coverage to meet their medical needs. In March 2017, we adopted a core set of principles to guide and measure any work to reform, change or improve our nation's health insurance system. Our core principles are that health care must be adequate, affordable and accessible./1

Today, millions of Americans, including many who are low-income or living with pre-existing health conditions, rely on health care coverage received through the Patient Protection and Affordable Care Act (ACA). Prior to the enactment of the ACA, it was difficult -- and often impossible -- for people with, or at risk of, serious illnesses to get or keep affordable and adequate health insurance. The enactment of the ACA has radically improved our patients' experience with health insurance. Now, issuers are required to provide comprehensive coverage and prohibited from unfair coverage restrictions that discriminate against people with serious or chronic illnesses on the basis of their pre-existing condition.

However, over the past several years, new insurance rules have allowed issuers across markets to discriminate against people with pre-existing conditions as they did prior to the passage of the ACA. The proliferation of these non-ACA-compliant (non-compliant) plans has weakened the overall effectiveness of the ACA by exposing consumers, particularly those with pre-existing conditions, to significant financial risk, segmenting the individual market risk pool and unnecessarily inflating insurance premiums for people who rely on comprehensive coverage provided through the ACA marketplaces.

In comparison to the consumer protections that apply to ACA-compliant health insurance, non-compliant plans utterly fail to provide the same degree of certainty and security for patients and consumers. A chart comparing non-compliant plans to these protections can be found at Exhibit 1.

Due to the unregulated nature of these plans, a full picture of their impact is unknown. This report endeavors to compile what is known about the most common kinds of non-compliant plans and make recommendations for Congress, the administration and state leaders. These actions, if implemented, would significantly improve patient protections for millions of people in the United States living with serious and chronic health conditions. The plans examined include:

* Short-Term, Limited-Duration Insurance

* Heath Care Sharing Ministries

* Farm Bureau Plans

* Grandfathered Plans

* Misuse of arrangements subject only to non-ACA federal regulations (ERISA), including

* Multiple Employer Welfare Arrangements and Association Health Plans

* Spurious single-employer self-insured Group Health Plans (Data Marketing Partnership Scheme)

* Minimum Essential Coverage-Only Plans

* Excepted Benefit Plans

Recommendations at a Glance

Recommendations for Congress

* Codify Short-Term, Limited-Duration Insurance (STLDI) Protections Into Law: Congress should codify the three-month duration limit and additional provisions in statute in order to protect patients and consumers. These include restoring limiting renew-ability and closing the "stacking" loophole, halting sales of STLDI plans during open enrollment, limiting sales via internet and phone, establishing a prohibition on recissions, improving disclosures, and requiring plans and brokers to report STLDI enrollment and plan data.

* Prohibit the Use of Brokers for Enrollment: Congress should prohibit brokers from selling HCSMs and other insurance-like products. Using brokers to enroll members contributes to consumer confusion and increases enrollment in inadequate coverage.

* Revise the Federal Definition of Insurance: Congress should revise the federal definition of insurance to curtail the inappropriate sale, marketing and development of insurance-like-products that jeopardize patient health and safety. This should capture any products that are marketed to consumers as -- or resembling -- health insurance, such as health care sharing ministries, farm bureau plans, association health plans and some limited-indemnity plans.

* Investigate Spurious Single-Employer ERISA Plans Arrangements: There has been a long history of attempts to avoid state insurance regulation by exploiting the ERISA exemption. Congress should thoroughly investigate arrangements that pose risks to patients and consumers.

* Require Employer Plans to Cover Essential Health Benefits (EHBs) and Adhere to EHB Standards: Congress should extend the EHB requirement and at least, a modified AV standard to large group plans, both fully insured and self-insured.

* Require Issuers Selling Excepted Benefits to Confirm Enrollee is Covered by Comprehensive Coverage and Prohibit the Sale of Excepted Benefits that Mimic Fully Regulated Insurance: At the federal level, Congress should provide clear authority to issue regulations that require issuers to confirm enrollees are covered by comprehensive coverage before selling excepted benefit policies. Additionally, Congress should amend federal law governing excepted benefits to clarify that excepted benefits are exempt from regulation only to the extent such benefits do not duplicate, supplant or mimic the benefits provided by fully regulated coverage.

Recommendations for Federal Agencies

* Revise Federal Regulations Related to STLDI: At a minimum, the administration should work to restore the October 2016 regulation that prohibited STLDI plans from extending beyond three months. The administration should limit renew-ability and close the "stacking" loophole, halt sales of STLDI plans during open enrollment, limit sales via internet and phone, establish a prohibition on recissions, improve disclosures and require plans and brokers to report STLDI enrollment and plan data.

* Revoke Proposed Rule on Health Care Sharing Ministries (HCSM): The June 2020 proposed IRS rule, which would allow HCSM premiums to be paid for with pre-taxed dollars, should be withdrawn.

* Rescind the Grandfathered Plan Rule: The Departments of HHS, Labor, and Treasury should withdraw the rule on grandfathered group health plans finalized in January 2021, which weakens existing regulations and further degrades patient protections.

* Rescind the 2018 Association Health Plan (AHP) Rule: The administration should move immediately to rescind the 2018 AHP rule. The rule, which was blocked in substantial part by a federal court, is unlawful, endangers consumers and undermines the functioning of the ACA-compliant individual and small group markets. A new rule should also prohibit sole proprietors from enrolling as a "small group" and strengthen licensing requirements for self-funded AHPs.

* Codifying the "Look Through" Doctrine: Centers for Medicare and Medicaid Services (CMS) should codify the "look through" doctrine in regulation. The doctrine holds that, except in "rare instances," regulators must "look through" an association and regulate the health coverage that the association issues based on the type of entity that actually receives it.

* Clarifying the Term "Issuer": CMS should clarify through guidance or regulation that a self-funded multiple employer welfare arrangements (MEWA) that is regulated by a state is an "issuer" for purposes of federal law and, therefore, subject to federal insurance requirements applicable to issuers. This would mean clarifying "issuer" to ensure that it is sufficiently broad to include entities that (1) must obtain state authorization to engage in what is the business of insurance and (2) are subject to at least some state insurance law standards.

* Investigate Spurious Single-Employer ERISA Plans Arrangements: Federal regulators should thoroughly investigate arrangements that pose risks to patients and consumers.

* Vigorously Defend the Department of Labor's Position in the Data Marketing Partnership Lawsuit: DOL's advisory opinion determining that Data Marketing Partnership (DMP) would not qualify for the ERISA exemption was correct. The Administration should continue to seek the reversal of a lower court decision holding otherwise. If necessary, DOL should codify this ruling by issuing a regulation clarifying that arrangements such as those developed by DMP do not qualify for the ERISA exemption.

* Ensure Sufficient Oversight of ERISA Plans, Including AHPs and MEWAs: Federal regulators should commit resources to ensure robust federal oversight of these entities and improved coordination with state regulators.

* Monitor and Collect Data on Large Employer Plans: DOL should conduct a study of large employer plans on a routine basis. These reports would help increase understanding of the employer-sponsored insurance market and may reveal existing or emerging gaps in coverage that would be considered essential services.

* Require Strong Disclosures of Limited Benefits: Policymakers should require plans to include disclosures that clearly define the limits of coverage and disadvantages of these plans, whether bought alone or in coordination with other coverage. Brokers should be required to first screen applicants for eligibility for financial assistance to buy an ACA plan or to enroll in Medicaid.

Recommendations for States

* Limit or Consider Prohibiting STLDI Plans: States should retain their capacity to regulate beyond a federal floor and should restore STLDI plans to a three month duration or consider prohibiting the sale of STLDI plans outright -- offering the fullest protection to patients and consumers in their jurisdiction.

* Require STLDI Plans to Meet Minimum Standards: In addition to limiting the duration, state regulators should consider going further by requiring STLDI plans to comply with important patient and consumer protections, as a catastrophic health event can occur within a three-month duration. These could include requiring issuers to comply with patient protections such as coverage of EHBs, bans on recessions, requiring plans to meet a minimum loss ratio and minimum actuarial values, amongst others. States should also improve disclosures for STLDI plans and require plans and brokers to report STLDI enrollment and plan data.

* Increase Transparency and Data Reporting for HCSMs: HCSMs should be required to disclose plan data, marketing practices, broker incentives, enrollment information and complaint information to state and federal regulators. Specifically, state regulators must have information on HCSMs marketing in their states in order to evaluate whether their operations constitute the business of insurance, to watch for deceptive marketing and to monitor enrollment.

* Prohibit Sales Through Brokers: Brokers should be prohibited from selling HCSMs and other insurance- like products. Using brokers to enroll members contributes to consumer confusion and increases enrollment in inadequate coverage.

* Maintain or Reestablish Authority Over Farm Bureau Plans: States where these plans exist should repeal the laws carving them out of regulation. States should maintain (or reestablish) regulatory authority over health coverage offered by the Farm Bureau and should not exempt such coverage from the state insurance code.

* Strengthen Licensing Requirements for AHPs: State regulators should require self-funded AHPs to satisfy the same licensure and financial standards required of commercial insurers.

* Ensure Sufficient Oversight of AHPs and MEWAs: States should commit sufficient resources to ensure robust state oversight of these entities.

* Investigate Spurious Single-Employer ERISA Plans Arrangements: State regulators should thoroughly investigate these arrangements. The Texas court ruling is not binding on states and does not limit the authority of state regulators to investigate potential violations of state law by entities doing insurance business within the state.

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CONCLUSION

Our organizations appreciate the opportunity to share our priorities for the substandard and non-compliant health insurance markets. Patients, now more than ever, need access to adequate and affordable health insurance coverage, and limiting the sale and availability of the harmful products detailed in this report is just one step toward securing the health and wellbeing of patients across the country. It is imperative that policymakers take steps immediately to pursue the changes we have outlined in this document.

For questions or comments regarding the content of this document, please contact Katie Berge, Director of Federal Government Affairs, at The Leukemia & Lymphoma Society at [email protected].

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Footnote:

1/ https://www.lls.org/sites/default/files/National/healthcare-principles.pdf

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The full report can be viewed at: https://www.lls.org/sites/default/files/National/undercovered_report.pdf

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