Modern Healthcare – August 12, 2019

10 Modern Healthcare | August 12, 2019

The average loss ratio of the five insur-

ers that bring in the most premiums from

short-term insurance policies was 39.2%

in 2018. That means that 39 cents of every

$1 collected in premiums was spent on

medical care, while the rest was spent on

administrative expenses or kept as profit.

In contrast, the average loss ratio among

comprehensive major medical plans

purchased by individuals in 2018 was

about 73%, according to the NAIC report.

ACA-compliant plans must meet a

minimum medical-loss ra-

tio of at least 80% or else pay

rebates to enrollees, while

short-term plans are not

subject to such a minimum

requirement.

The loss ratio for United-

Healthcare, the leader in

the short-term plan mar-

ket, decreased each year to

37.3% from 50.9% in 2016,

according to the NAIC

annual reports. Over the

same period, the company,

which sells short-term plans through its

Golden Rule Insurance unit, has grown

its premiums from those plans from

$26.5 million to $41.7 million, up 57%.

UnitedHealthcare said in response

to a question about why its loss ratio is

decreasing: “These policies are not right

for everyone and we work to ensure

consumers have the information they

need to make the right decision based

on their circumstances.” A company

spokeswoman added in an email that

loss ratios can vary significantly year to

year because of the shorter plan dura-

tion and changes in who buys the plans.

According to the NAIC’s latest report,

about 86,600 people enrolled in short-

term plans in 2018, but that figure likely

doesn’t capture the entire market since

many short-term plans are being sold

through out-of-state associations ex-

empt from regulation.

The CMS expected about 600,000 ad-

ditional people to enroll in short-term

plans in 2019, with that figure reaching

1.6 million people by 2021 or 2022. l

MOST SHORT-TERM health plans in

2018 didn’t come close to paying claims

at Obamacare-required rates.

For every dollar in premiums that

UnitedHealthcare collected from peo-

ple enrolled in a short-term plan last

year, it spent less than 40 cents on pa-

tients’ medical claims.

Cambia Health Solutions, which op-

erates Blues plans in four states and sells

short-term plans through its LifeMap

subsidiary, spent even less on medical

care for those plans, paying out just 9

cents for every dollar in premiums.

These low “loss ratios”—which show

the percentage of premiums spent on

medical claims and were published re-

cently in the National Association of In-

surance Commissioners’ 2018 Accident

and Health Policy Experience Report—

are a stark reminder that short-term

plans benefit insurance companies

more than the patients who purchase

them. The data bring into question

what kind of value people receive from

a short-term health plan, insurance ex-

perts said. The Trump administration

expanded access to such plans last year.

“Compared to comprehensive plans

that have to comply with the ACA’s

rules, short-term plans’ coverage lim-

itations often result in carriers paying

out far fewer claims, or paying pennies

on the dollar,” said Rachel

Schwab, a research asso-

ciate at Georgetown Uni-

versity’s Center on Health

Insurance Reforms.

In a statement, Cambia

said that the MLR reported

by the NAIC was not rep-

resentative of its business

because of differences be-

tween claims incurred. The

actual rate, it says, is 32%,

which is still the lowest of

plans reported on.

By Shelby Livingston

Insurance

Short-term health plans spent little

on medical care

THE TAKEAWAY

Newly published

data from the

National Association

of Insurance

Commissioners

shows that short-

term health plans

spend a small

percentage of

members’ premiums

on medical claims.

LOSS RATIO

0% 10% 20% 30% 40% 50% 60% 70% 80%

Loss ratios for short-term health plans in 2018

Short-term medical insurers’ loss ratios, which show the percentage of premiums

spent on patients’ medical claims, fall far below the average loss ratio among

comprehensive major medical plans.

Note: Chart excludes one insurer with no covered lives as of Dec. 31, 2018.

Source: NAIC 2018 Accident and Health Policy Experience Report

Cambia Health Solutions

Spectrum Health

Geneve Holdings

(IHC Group)

UnitedHealth Group

Medical Mutual of Ohio

Blue Cross and Blue Shield

of South Carolina

Blue Cross of Idaho

National General Insurance

Blue Cross and Blue Shield

of Kansas City

Average loss

ratio of

comprehensive

major medical

insurance plans:

72.57%

78.88%

58.07%

54.9%

44.22%

40.04%

37.32%

36.22%

3 6.11%

9.34%