2
back, or “stacked” policies. Five of the six brochures examined expressly noted that any conditions
developed while covered under a previous plan were considered pre-existing under the new plan.
Premium variation: Generally speaking, plan premiums were higher for products with longer coverage
periods, with the exception being the 36-month plans offered in Pennsylvania. In a majority of the states
examined, average plan premiums were less expensive in rural areas compared to urban areas. We also
examined the number of plans offered in each geographic area and found robust issuer participation in
most geographic areas.
Hypothetical Patient Profile: Short-term plans can be marketed as a protection against unexpected
illness or injury. Given that most cancer diagnoses are unexpected we endeavored to assess what kind
of coverage an individual who was diagnosed with breast cancer after enrolling in a short-term plan
could potentially be offered. We used the example of a 57-year-old, non-smoking woman as a
hypothetical patient profile. The scenario assumed she would pass medical underwriting and be able to
purchase a short-term plan but would then developed breast cancer after enrollment. To keep the
scenario simple, we assumed certain issuers would not raise premiums or rescind coverage for the
sample patient, even though individuals diagnosed with cancer and covered under a short-term plan
would likely face either higher premiums or cancellation of coverage.
1
In our hypothetical, the total cost of treating breast cancer for the first year was estimated to be
$179,229.41, with health care costs highest in the month following diagnosis. We found the hypothetical
patient’s out-of-pocket costs would vary by duration of short-term plan as follows:
• 3-month plan: Assuming the enrollee was able to access all covered services in-network and
further assuming no delays in treatment, the plan would cover a little less than $60,000 in
services. The enrollee’s share of the treatment would amount to over $111,000, plus an
additional $363.90 in total premiums ($121.30 per month). The enrollee would become
ineligible for subsequent coverage of her cancer care in a short-term policy because her cancer
diagnosis would be considered a pre-existing condition.
• 6-month plan: Assuming the enrollee was able to access all covered services, the plan would
cover roughly $106,000 worth of the enrollee’s treatment. The enrollee would incur more than
$63,000 in cost-sharing related to her treatments, and an additional $1,570.56 in total
premiums ($261.76 per month).
• 12-month plan: The 12-month plan provided the most coverage relative to the other plans
examined. However, this plan still left the enrollee with over $40,000 in cost-sharing, not
including monthly premiums which totaled $31,184.52 ($2,598.78 per month). Taken together,
the enrollee’s cost-sharing and monthly premiums totaled $71,886.95, which is higher total
1
For example, people who are enrolled in short-term plans and then are treated for a serious illness may face
“post-claims underwriting,” in which the insurer examines their medical history and records for prior signs of the
condition, with the aim of deeming it pre-existing and avoiding payment of any related claims. Our scenario
assumed that did not happen to the enrollee. The scenario also assumed the insurer would pay the full in-network
charge of a given covered service, without any “balance billing,” which requires an enrollee to pay extra charges
not covered by the plan. For further details about the scenario used, see Appendix B.