Some Democratic lawmakers worry that as the continuous enrollment protection for Medicaid comes to an end, Americans removed from the safety-net program may turn to short-term health insurance, causing enrollment in such plans to surge. Insurance experts say that while this concern is reasonable, the actual impact may be limited given that the Affordable Care Act (ACA) marketplace offers more affordable and comprehensive options.

However, experts also point out that the Biden administration should still take action to restrict short-term limited-duration plans. Such plansdo not protect people with pre-existing conditions, often deny claims based on health status, retroactively cancel coverage for enrollees, and lead to exorbitant surprise bills due to a lack of in-network providers. Currently, about half of U.S. states have banned or restricted the sale of short-term plans.

"Marketing for some short-term plans can be misleading," said Matt Fiedler, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy. "The concern is that some people who should be in the ACA market could be lured into the short-term market after losing Medicaid."

ACA plans: a cheaper, more comprehensive alternative

One of the Trump administration's most controversial health policy actions was extending the duration of short-term plans and opening them to all consumers. These plans were originally designed as cheap, three-month safety-net coverage that did not need to cover the ten essential health benefits required by the ACA. Due to the policy relaxation, enrollment in short-term plans grew to about 3 million in 2019, according to a House investigation.

President Joe Biden has criticized such plans, but his administration has not yet overturned the Trump-era rules. Earlier this month, the Democratic leader of the House Energy and Commerce Committeesent a letterto the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury, urging them to revoke short-term limited-duration plans before the end of the Medicaid continuous enrollment requirement, fearing that millions of consumers could be pushed into "junk" insurance.

During the COVID-19 public health emergency, Medicaid eligibility reviews were paused, causingenrollment to swellto over 80 million. But the continuous enrollment protection ends on March 31, after which states can restart eligibility determinations. According to projections by the Urban Institute, about18 million people will lose Medicaid, with over 1 million moving to the non-group market (including ACA exchanges) and about 3.8 million losing coverage.

It is this population that faces the risk of falling into short-term plans. But researchers say that due to the currentlack of comprehensive data on short-term plan enrollment, it is difficult to assess the severity of the problem. Like other insurers eager to attract new members, short-term plan operators may ramp up marketing from April, targeting consumers looking for insurance during Medicaid redetermination.

Misleading marketing tactics and consumer uncertainty about insurance options could lead more people to choose plans that do not fit their needs. Non-ACA plans have adocumented historyof deceptive marketing: sales representatives often misrepresent coverage, pressure consumers into buying over the phone with insufficient information, or fail to disclose major coverage limitations, including exclusions for pre-existing conditions.

"Unfortunately, a lot of this marketing hides what short-term plans actually cover, what they truly cover and don't cover," said Sabrina Corlette, director of the Center on Health Insurance Reforms at Georgetown University. Misleading marketing may promote short-term plans as cheaper than ACA plans to attract price-sensitive consumers.

But thanks to the pandemic-era financial assistance that Congress recently extended through 2025, more Americans are now eligible for subsidized plans on the ACA exchanges. People with incomes above 400% of the federal poverty level can receive subsidies, and lower-income individuals get more help. For example, those with incomes below 150% of the poverty level can access zero-premium plans. As a result, short-term plans may have monthly premiums hundreds of dollars higher than exchange plans, with significantly higher out-of-pocket costs. In asecret shopper surveyconducted by the Center on Health Insurance Reforms, marketers recommended monthly premiums ranging from $70 to $300.

"Short-term policies are more expensive for very low-income people, and I think brokers would find it hard to sell in that market," said Sara Collins, vice president for health care coverage at The Commonwealth Fund.

Another reason experts are not worried about a surge in short-term plan enrollment is that the ACA has opened a special enrollment period during the Medicaid redetermination process. Historically, people chose such bare-bones plans often because they missed ACA enrollment deadlines and had no qualifying life event. But during the Medicaid "unwinding," the Biden administrationannounced a special enrollment period, and states running their own exchanges areexpected to follow suit, industry experts say.

"A theoretical possibility"

HHS said in itsrecent rulemaking agendathat it plans to issue a proposal on short-term plan expansion by April. But that timeline is not binding, and researchers say it is hard to judge what priority regulators should place on it. Combined with the lack of clear data on short-term plan enrollment, even if a proposal were introduced now, it is unlikely to be finalized before the redetermination process ends given the length of the rulemaking process. However, health policy experts say HHS should still take steps to restrict such plans to address the problem of Americans being underinsured in the market.

Experts also emphasize that the Biden administration and state Medicaid and exchange agencies should strengthen marketing and consumer assistance for those newly losing Medicaid to prevent them from being tempted by misleading short-term plan marketing. CMS hasbeen working with states for over a yearto update enrollee contact information, including boosting administrative staffing, implementing outreach and beneficiary communication strategies such as social media campaigns and community partnerships.

"I hope the ACA outreach is broad and strong enough to drown out those bad plans," said Sarah Lueck, vice president for health policy at the Center on Budget and Policy Priorities.

Researchers note that in states that have not restricted short-term plan sales and have not expanded Medicaid, consumers face a greater risk of inadvertently choosing "bare-bones" coverage. The 11 states that have not expanded Medicaid, such as Florida and Texas, have higher proportions of low-income residents and less regulation, making them more attractive to insurers that may circumvent rules and misrepresent products, said Corlette of CHIR.

Overall, concerns that the Medicaid redetermination process will push a large number of consumers into short-term plans may be exaggerated. "Is it a theoretical possibility? Yes. Will it be large in numbers? My guess is probably not," said Fiedler of USC-Brookings. "But there is uncertainty."