While the Trump administration is promoting the sale of so-called “short-term” insurance plans, California legislators are working hard to protect consumers from what health advocates call “junk insurance coverage” that doesn’t cover essential health benefits, can deny people for pre-existing conditions, and may have annual and lifetime limits.
With bipartisan support the state Assembly voted 51-21 on Aug. 16 to prevent junk insurance, also known as “short-term” plans, from being sold in California.
And on Monday, Aug. 20, the state Senate voted 26-9 in favor of Senate Bill 910, authored by state Sen. Ed Hernández, D-West Covina.
SB 910 bans substandard “short-term” insurance, which put at risk those who buy such coverage but find out later it doesn’t cover many needed treatments.
“California is closer to keeping junk insurance out of our state. These short-term policies are dangerous and deceiving because they subject people to huge health care bills, barely cover any services and give people a false sense of security,” said Hernández of the passage of SB 910 in the Assembly which went to the Senate for voting and now it heads to the Governor’s desk.
On Aug. 1, the Trump administration’s Center for Medicare and Medicaid Services issued final regulations to extend “short-term” plans from three months to up to three years. These short-term plans do not have to cover essential health benefits, like cancer treatment, substance use treatment, or maternity care. Additionally, these plans can deny coverage altogether for those with pre-existing conditions.
“Junk policies are not alternatives to comprehensive health plans. As someone who has dedicated his life to advocating for proper health care, I will not stop fighting against Trump’s continuous assault on California’s insurance market and the health care of millions,” said Hernández. “I will not let California go back to the days before the ACA when you could be denied care completely or go into financial ruin because of this care.”
According to a brief on potential impact of short-term limited duration policies on insurance coverage, premiums, and federal spending released by the Urban Institute earlier this year, average individual market premiums would increase approximately 18 percent next year in the states that do not prohibit or limit these plans and because of the lack of enforcement of the individual mandate.
Those limited plans also target younger, healthier people, spiking premiums for those still in the remaining individual insurance market, according to health advocates.
“The California Legislature is right to respond to the Trump Administration’s attempt to create a giant loophole in ACA consumer protections, especially for patients with pre-existing conditions,” said Anthony Wright, executive director, Health Access California, the statewide health care consumer advocacy coalition and the sponsor of SB 910. “Insurers should not be able to sell this substandard insurance that often won’t cover you for the care you need,” said Wright.
“Not only can these plans deny people with pre-existing conditions and set annual and lifetime caps on care, but they often don’t cover things like maternity care, mental health services, or many prescription drugs, taking us back to the days where many people who needed help the most were unable to get it,” said Wright. “The additional insidiousness of these plans is that the lower cost siphons off younger, healthier people, leaving a smaller and sicker market for everyone else, and driving up premiums.”
If SB 910 is signed by the Governor, California would become the first state in the nation to ban the sale of these plans outright, said Wright. Other states have taken action to limit or regulate these plans, but none have prohibited the sale of these plans all together.
“I look forward to Governor Brown’s action on the measure,” Hernández said.
“California has been a leader in shielding our state from the attacks to our health care system by the Trump Administration and Congress. We welcome this bold step to protect Californians and ban these junk plans from being sold in the first place,” said Wright.
According to Wright, SB 910 is part of the broader #Care4AllCA package of legislative priorities to hold consumers harmless from federal administrative attacks and to take steps toward a more universal, affordable, and accountable health system in California. Many of these bills are still pending in the legislature. All bills must be acted on by Aug. 31.