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Short-Term Health Plans Have Growth Potential For Some Insurers: Analyst
Compiled by Insurance24
OLDWICK, N.J.–(BUSINESS WIRE)– The U.S. Department of Health & Human Services’ final rule on short-term, limited-duration medical products should have a positive impact on insurers that offer these policies, as these carriers will likely see top-line growth through increased sales in this business line, according to a new A.M. Best briefing.
The Best’s Briefing, “HHS Rule Expands Coverage Period for Short-Term Plans,” notes that among the finalized changes, the definition of a short-term policy — one that is less than 12 months — stays intact, but the coverage may be renewed for up to 36 months without re-underwriting the individual covered by the policy. A.M. Best believes that the longer duration of the policies and the inability to re-underwrite at renewal may result in higher rates than that seen on the current policies with 90-day duration limits, although the cost of these policies is expected to remain well below an Affordable Care Act-compliant policy.
According to the briefing, many carriers that offer short-term medical plans also sell supplemental benefits, such as hospital indemnity and accident insurance. Buyers of the short-term medical policies also may purchase these supplemental products, adding to the likelihood of premium growth. The potential to keep short-term medical clients for longer periods also may provide additional revenue and reduce acquisition costs. Ultimately, the greatest potential for uptake of short-term medical products in 2019 are purchases by healthier individuals who are not Affordable Care Act-subsidized, or by individuals that do not currently have coverage.
Fraud and overcharging driving up premiums – Insurance Alliance of Michigan executive
The executive director of the Insurance Alliance of Michigan has called on the state’s lawmakers to pass reforms that fix what he describes as Michigan’s “outdated” auto no-fault system.
In an op-ed piece published in The Detroit News, Insurance Alliance of Michigan executive director Pete Kuhnmuench blamed trial lawyers and medical providers who have “derailed” the legislature’s reform efforts.
He said auto no-fault law was initially passed to reduce the number of lawsuits filed after someone was injured in a car accident. But, in recent years, lawsuits have increased in both Metro Detroit and Grand Rapids.
“According to published reports, accident victims are routinely steered towards law firms or medical clinics, which are sometimes interconnected. A recent lawsuit filed in federal court seeks to expose these alleged patient mills,” said Kuhnmuench. “On the other end, medical providers overcharge patients who are injured in a car accident – frequently as much as two to three times more for the same procedure as other forms of insurance,” he added.
From Kuhnmuench’s perspective, reforms should include a crackdown on fraud and abuse, an end to overcharging by medical providers, and giving consumers a choice in the level of medical coverage that accompanies their car insurance.
According to a special report by The Economist, Detroit ranks as the city with the most expensive auto insurance in the country. Car owners there pay an average of $5,414 for auto insurance premiums – more than twice the state average and nearly four times the national average. With the average Detroit household earning $26,300 a year, the insurance premiums represent 21% of pre-tax income.
A survey by Marketing Research Group earlier this year revealed that auto insurance rates are among the top four most critical issues facing the state in voters’ minds. Of the 600 likely Michigan voters polled, 23% noted the cost of auto insurance as a major concern.
