House Democrats Investigate Trump-Backed “Junk” Healthcare Plans

House Committee on Energy and Commerce Chairman Frank Pallone, D-NJ, announced Wednesday May 8 that they are launching an investigation into so-called “junk” insurance plans backed by the Trump administration.

“Junk insurance” refers to short-term insurance plans, renewable for up to three years, enacted by the Trump administration as alternatives to Obamacare.

The plans are not required to have the essential benefits mandated by Obamacare, such as prescription drug coverage, maternity care, or mental health treatment, and they are not required to cover people with pre-existing conditions.

“Part of the problem with junk plans is that people think that it covers whatever they have.  And they don’t realize until they face reality that they don’t cover everything they thought they were going to have,” said Pallone.  “I’m very concerned that many consumers are being misled to believe these plans comply with the patient protections under the Affordable Care Act.”

Letters were sent to 12 insurance companies and brokers requesting information, including Anthem Inc., UnitedHealth Group Inc., Health Insurance Innovations Inc. and Cambia Health Solutions.

Lawmakers want to know how companies market the short-term plans, what percentage of applicants are denied coverage, and the commission fees for brokers. They also asked for plan applications and underwriting documents.

The Trump administration has promoted short-term health plans as less-expensive alternatives to coverage purchased through the ACA, though the plans do not have to  comply with the 2010 health law.

ACA proponents fear short-term plans will pull healthier people out of the law’s markets, leaving a higher proportion of sick people in those markets and leading to higher premiums.

An Urban Institute study earlier this year found that brokers received higher commissions when selling these short-term plans than ACA-compliant plans, and that brokers selling these plans often decline to provide any written information to consumers when requested to do so.