California lawmakers move against ‘junk’ health insurance

Update: The Legislature passed, and Gov. Jerry Brown signed, SB 910.

Legislators in California appear ready to counter a new Trump administration move, this time on health insurance.

Last week, federal officials announced they would expand health insurers’ ability to sell so-called skinny insurance plans, short-term policies that offer only bare-bones benefits. Those plans also are called “junk” plans because of the dearth of conditions and ailments they cover—for instance, most don’t cover maternity care or cancer treatment, and some have high deductibles or exclude pre-existing conditions.

Less expensive because of the “skinny” coverage, the plans were launched under the Obama administration as a bridge to Affordable Care Act plans. They were limited to three months and could not be renewed.

The new federal rules allow low-benefit plans that don’t comply with ACA standards to last a year and be renewed for up to three years.

A proposal making its way through California’s Legislature, which returns from summer recess tomorrow, would ban such insurance in California.

SB 910, by Democratic Sen. Ed Hernandez of Azusa, would outlaw issuance or renewal of any health plan shorter than 12 months in duration. ACA standards require longer-term insurance, bar denial of coverage based on pre-existing conditions and mandate 10 essential health benefits.

The short-term, low-benefit plans are fine as long as you stay well, Hernandez said. But people with those plans who get sick often discover they have to pay for treatment and medication themselves. Basically, he said, that’s not health care coverage.

“California needs to ban junk health insurance policies in our state, not only because they are an affront to the basic principles of the Affordable Care Act, but also because they are dangerous and deceiving,” Hernandez said by email Friday.

Dozens of Republican legislators have either voted No on his bill or abstained, but did not articulate that opposition in hearings. Attempts to contact several of them were unsuccessful Friday.

One health care expert said he had hoped the idea of limited-benefit plans had been put to rest, after the years of policy discussion before and during setup of the Affordable Care Act.

“There are significant costs to having skinny plans,” said Micah Weinberg, president of the Bay Area Council’s Economic Institute, a San Francisco-based business think tank. “People still get medical care, even if it’s not covered, so the hospitals or the state end up holding the bag.”

That means taxpayers are basically subsidizing people on limited-benefit plans, he said.

“It isn’t actually insurance,” Weinberg said. “It provides a sense that you’re insured, but if you need it, you don’t really have it.”

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