‘Junk’ Health Insurance (SIGNED)


The Legislature wants to outlaw so-called junk health insurance—short-term policies that are generally cheaper and offer less coverage than other plans and typically exclude pre-existing conditions. The bill would uphold federal Affordable Care Act standards for basic benefits that include coverage of pre-existing conditions.

The measure bucks the Trump administration’s decision that states can allow insurance that excludes such things as cancer treatment, maternity care, prescription drugs and such pre-existing conditions as allergies, asthma and diabetes. California would be the first state to explicitly put the ban into law, though several other states, including Massachusetts, New Jersey and New York, have stated they wouldn’t allow low-cost, short-term junk insurance. Supporters of these policies say they can be a good option for some people.

Under the Affordable Care Act, short-term plans were designed to fill coverage gaps for up to 90 days while people transitioning to new plans waited for them to kick in. The new federal rules allow states to turn those bare-bones, short-term plans into coverage for up to three years.


Health care advocates, medical organizations, employer groups and even some health insurance companies, such as Kaiser Permanente and Blue Shield of California, endorsed the bill.


Three groups have lodged objections to the bill. The California Association of Health Underwriters and TechNet, both trade groups, have expressed concern that eliminating short-term plans could force some consumers into expensive emergency-room care during a gap in coverage. Anthem Blue Cross has said it agrees with the federal change and that short-term plans with limited coverage offer value for some customers.


People with short-term insurance still need health care, and if they get sick and find their insurance won’t pay for it, then taxpayers may have to—in the more expensive ER setting. And short-term insurance causes higher premiums for others, according to a study by the nonprofit Urban Institute. That’s because young, healthy people are the ones who tend to pick inexpensive health insurance with little coverage, which means people with Affordable Care Act-level coverage tend to be comparatively less healthy and require more care. Without limits on short-term insurance, the Urban Institute predicted a 17.8% rise in premium costs for fuller policies.


Signed by Governor Brown on September 23, 2018.

—David Gorn