State Options to Protect Consumers and Stabilize the Market

A new analysis examines three ways states can protect consumers and stabilize their markets in response to an Executive Order that expands access to short-term, limited duration health insurance plans.

The Issue

Short-term coverage is health insurance designed to fill temporary gaps in coverage, but its expansion through Executive Order risks market segmentation and consumer confusion. States have the tools and authority to fill this regulatory gap and head off potential complications, protecting consumers and maintaining stability of the individual market.

Key Findings

States could leverage their authority in three ways to regulate short-term coverage:

• Require short-term coverage to comply with the rules of the individual market established by the Affordable Care Act and some market reforms such as the coverage of essential health benefits, as well as limit the duration of these plans.
• Require insurers to price short-term plans to reflect their true costs, likely leading to higher premiums for these plans. States can also require that short-term policies meet federal requirements on a minimum medical loss ratio.
• Require consumer education about short-term plans and their associated risks and limitations, and subject the plans to increased regulatory review, such as tracking enrollment and reviewing insurance broker commissions.

Conclusion

State governments still have broad regulatory authority over short-term coverage even though an Executive Order has expanded access to this type of coverage. States have the means to ban or limit short-term health plans, reduce market segmentation risk, and increase consumer disclosures and regulatory oversight.

About Georgetown's Health Policy Institute--Center on Health Insurance Reforms

The Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute is a nonpartisan, expert team of faculty and staff dedicated to conducting research on the complex and developing relationship between state and federal oversight of the health insurance marketplace.