Top Democrats Raise Alarm Over Reports of Junk Insurance Plans Putting Consumers at Risk

Top Democrats announced a series of letters today raising serious concerns over reports of private companies offering products on the individual health insurance market that may not comply with federal law, and which appear to both deceive consumers and put them at great financial risk. The Democrats also voiced concerns that the Trump Administration's expected regulatory actions will exacerbate this problem by causing chaos and uncertainty and further undermining consumer protections in the individual market.

The letters were signed by House Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ), House Ways and Means Ranking Member Richard Neal (D-MA), Senate Finance Ranking Ron Wyden (D-OR), and Senate HELP Ranking Member Patty Murray (D-WA).

The Democrats raised their concerns in a letter to National Association of Insurance Commissioners (NAIC) President Ted Nickel requesting state insurance regulators' assistance in addressing the problem of companies selling "skinny" plans that are marketed as "ACA-compliant", but do not meet basic ACA requirements such as hospitalization coverage or the prohibition on annual and lifetime limits. The Democrats are also seeking to understand how state regulators plan to ensure that consumers have the tools they need to make informed decisions in light of the possible proliferation of "skinny plans" under the Trump Administration's planned administrative actions pertaining to association health plans and short-term plans.

"We are writing to express concern regarding recent reports of companies offering products on the individual market that may not comply with federal law, and which appear to put consumers at great financial risk," the Democrats wrote to NAIC President Nickel. "The Trump Administration's efforts to sabotage the health care system appear to have created opportunities for unscrupulous actors to sell stripped-down insurance plans that could leave unwitting consumers on the hook for tens of thousands of dollars in healthcare costs. We seek your help and guidance on ways to reduce the risks these so-called "skinny plans" pose for consumers."

The Democrats also sent letters to Xpress Healthcare and Apex Management Group in response to reports suggesting that both companies are offering products on the individual market that do not comply with federal law.

"Recent reports indicate that your company is avoiding or ignoring [federal] requirements under the ACA by offering "skinny plans" that claim to be ACA-compliant, but do not offer the same consumer protections required for plans sold in the individual market," the Democrats wrote to Apex Management Group. "In addition to these questionable marketing practices, it is unclear whether you are properly licensed under state law to sell these plans in the individual market."

As part of their inquiry, the Democrats are requesting answers to a series of questions including:

• Does your company sell any individual plans that do not comply with required consumer protections under federal law, such as the essential health benefits package, annual and lifetime out of pocket limits, and prohibitions on rescissions of coverage and coverage denials based on preexisting conditions?
• Please provide a written explanation of how your products are not insurance and therefore you are exempt from state laws governing the regulation of insurance and licensure.
• Have you received complaints from consumers who enrolled in one of your plans and then discovered it does not offer comprehensive coverage for basic healthcare services?

Letter to NAIC available HERE.

Letter to Xpress Healthcare available HERE.

Letter to Apex Management Group available HERE.

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