By Dania Palanker and JoAnn Volk
Millions of Americans are eligible for health insurance plans with low or no premiums and significantly reduced cost-sharing this coming open enrollment period thanks to enhanced marketplace subsidies under the American Rescue Plan (ARP). But misleading marketing practices may direct some consumers to alternative plans that lack the Affordable Care Act’s (ACA) protections. Researchers at CHIR recently replicated a previous secret shopper study to determine if consumers shopping for comprehensive health coverage during the COVID-19 special enrollment period were still being directed to these alternative plans. Authors spoke to 20 agents, brokers, and sales representatives; only five of them recommended a plan sold through the marketplaces with all of the ACA protections and the enhanced subsidies made available under the ARP. Instead, they were selling alternative plans—including fixed indemnity plans, short-term health plans, and health care sharing ministries— that fail to protect people with preexisting conditions, exclude many essential health benefits, and leave enrollees vulnerable to catastrophic medical bills.
Authors developed two consumer profiles: 1) 28-year old “Dani” without any preexisting conditions; and 2) 48-year old “Jen” who takes a generic medication for high cholesterol and has an unspecified heart condition. Both were in a one-person household with an annual income of $20,000 and searching for new coverage because of a loss of employer coverage and a planned move to Texas. in an ACA plan with low premiums and out-of-pocket costs during the COVID-19 special enrollment period. Instead, most representatives pushed alternative plans.
The representatives we spoke with had quite a lot to say—and a lot of what they said was just plain wrong. Here is a sampling of some of their claims:
- “The government plans are kind of expensive. Like if you look up like the Biden or the Obama Biden care plan, those premiums are expensive.”
Not for Dani and Jen. Based on their income, both were eligible for plans with $0 premiums.
- “It can be a harder plan to get approved for, but if we can get to approval, hospitalization will pay $1,000 a day.”
The average expenses for a day in the hospital is $2,633 in Texas. This plan wouldn’t even cover half of that.
- “To lower the premium, I took off substance abuse”
It’s unlikely that substance use was even a covered benefit in the first place. There are some alternative plans that do cover substance use treatment, but their coverage is very limited and you can’t pick and choose whether substance use treatment is included.
- “Remember right now we’re not in open enrollment.”
It wasn’t technically open enrollment. But there was a special enrollment period both because of the public health emergency and because Dani and Jen qualified for a special enrollment period for loss of employer coverage.
- “You have to be healthy and well—which you are—to qualify for these options.”
This one is true. Many consumers with medical conditions won’t qualify for the alternative plans being sold. It isn’t even clear if Jen, with her heart condition, would qualify—but if she did, then any treatment related to her heart would be excluded as a preexisting condition.
- “Bad news is that the plans in the marketplace, they’re definitely a bit above your price point, but they have really high deductibles as well, which you have to meet those before they begin to cover you and, as healthy as you are, that’s kind of a painful. It’s a painful thing to walk into, you know what I mean.”
Nope—both Jen and Dani were eligible for a cost-sharing reduction plan for just $2 a month. Premiums and cost-sharing would be lower for her in a silver plan on the marketplace.
You can read the full issue brief here.
[This blog originally appeared on the Georgetown University Center on Health Insurance Reform blog.]