Congress needs to clamp down on 'junk insurance'

Skimpy health plans sold by shady companies are not a solution to rising insurance costs. Americans are unfortunately finding this out the hard way — usually, in the middle of medical emergencies. And unless the U.S. Senate acts, more will have to learn this painful lesson.

Thanks to a new Bloomberg news service report, there is now a deservedly harsh spotlight on a dubious option that consumers are increasingly likely to come across if they buy insurance on their own instead of getting it through an employer. The policies are known as "short-term" plans, and while often attractively priced up front, they can be riddled with exclusions and limitations, leaving consumers at risk of hefty medical bills if they get sick.

As the name suggests, the plans aren't intended to provide long-term coverage, which is why they are not subject to the Affordable Care Act's comprehensive coverage requirements. Instead they're supposed to be a bridge for those between coverage, such as those who have lost a job suddenly or have retired but are months away from qualifying for Medicare.

But last summer, the Trump administration made a reckless change to expand short-term plans' availability. Officials rolled back the three-month time limit placed on these plans by the ACA, allowing consumers in many states to buy short-term plans lasting for up to a year, and then to renew them. The pitch: Consumers now have a more affordable option as they shop for coverage.

What the Bloomberg article makes clear is that consumers who buy the plans may not understand the inherent trade-offs. The results can be tragic, as David and Marisia Diaz's story illustrates. The Arizona couple bought a short-term plan but didn't realize they had done so. When David had a heart attack, the amount they personally owed came to $244,447. They thought the plan would pay out a total of $750,000 after they met a $7,500 deductible. Instead, hospital coverage was capped at $1,000 a day, with a $5,000 surgery maximum. In theory, the plan would have paid out $750,000 a year, but only if the couple had required hospitalization for 100-plus different surgeries in one year.

The Bloomberg report documents similar discoveries elsewhere. A Montana trucker who bought a policy from the same firm as the Diaz family is suing the company after his insurance didn't cover cancer treatment. The article also says there are numerous complaints about the company, Health Insurance Innovations Inc., filed with the Federal Trade Commission.

The Trump administration's ill-advised policy change is expected to boost enrollment in short-term plans from 100,000 last year to 600,000 this year. Reading the fine print is vital. So is researching the financial assistance still available through the ACA to buy real health insurance. Fortunately, some states, including Minnesota, limit enrollment in short-term plans to six months or fewer. The federal move does not change that, but the patchwork of state safeguards is inadequate. Congressional action is needed.

A bill authored by Rep. Lisa Blunt Rochester, a Delaware Democrat, cleared the House in May. Provisions in it would roll back the Trump administration's expansion of short-term plans, sometimes known as "junk insurance." All of Minnesota's Republican House delegation voted against the bill.

A similar "junk insurance" protection bill has been introduced in the Senate by Wisconsin Democrat Tammy Baldwin. There's no excuse for inaction. A health crisis is no time to discover you've bought a shoddy policy.