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Substandard health insurance comes with low premiums but high risk

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A woman looks at her health insurance policy.
Teresa Boardman, who owns a small St. Paul real estate company, said she's fed up paying hundreds of dollars a month for a plan that covers almost nothing.
Mark Zdechlik | MPR News

“I’m willing to take a gamble.”

That’s what health insurance has come down to for Teresa Boardman, who owns a small St. Paul real estate company. She’s sick and tired of paying several hundred dollars a month for a plan that meets the requirements of the Affordable Care Act but won’t cover much of anything until she satisfies a several-thousand-dollar deductible.

Boardman is not alone.

Many Americans struggle with the cost of health care. Now that there’s no longer a hefty tax penalty for buying coverage that fails to meet the standards of the Affordable Care Act, cheaper alternatives can be enticing.

Last week, 54-year-old Laura Lehner started looking for alternatives to her $630 a month ACA coverage. “I can’t afford that much money every month,” she said.

After a quick Google search, Lehner got in touch with Highland Health Direct. Since then, the company has been bombarding her with telephone calls but refuses to provide details about the plans it offers. Lehner said the company’s been calling her more than a dozen times a day.

“I didn’t realize they were going to hound me to death,” she said.

A woman holds a health insurance bill.
Laura Lehner started looking for alternatives to her $630 a month ACA coverage. “I’m just at a loss," she said.
Mark Zdechlik | MPR News

As if on cue, Highland Health called during our short interview.

All the agent wanted to talk about was how much Lehner was willing to spend — not what types of plans were available. When Lehner said she wanted to hear about what plans the company could offer, the representative told her: “That’s not how it works.”

Lehner said the company promised to send an email with plan details, but never did.

MPR News contacted Highland Health Direct to inquire about its business practices. A representative of the company abruptly ended the phone call.

“This marketplace is dangerous for people who don’t have an advocate,” said Andy Whitman, a professor of insurance at the University of Minnesota. “There’s a big marketing push to sell insurance which people should not buy.”

Whitman said Trump administration rule changes have opened a floodgate of options that bypass ACA minimum coverage requirements, most notably short-term health insurance. It used to be allowed only for three months but now can last up to a year in many places — six months in Minnesota, with an option to renew for another six.

Beyond short-term plans, some of the options include catastrophic, as well as indemnity coverage, and what is called “critical illness insurance.” It pays a lump sum if the policyholder contracts a specific covered illness. Consumer advocates say some of the options can work well to cover gaps or offset costs of conventional coverage. But as stand-alones, they’re risky.

Minnesota Commerce Commissioner Steve Kelley said his office has been getting complaints. “People were trying to save some money on a plan and then discovered that they were actually going to have to spend more because something wasn’t covered,” Kelley said.

People tripped up in those situations often have little recourse, Kelley said, because the details of their plans were disclosed — if not made exactly clear to them.

Minnesota Commerce Commissioner Steve Kelley
Minnesota Commerce Commissioner Steve Kelley says his office has been getting complaints about short-term insurance.
Mark Zdechlik | MPR News

“Most of the cases we see,” Kelley said, involve consumers who “just didn’t have a full understanding of the product they were buying.”

He said more than twice as many insurance companies filed for permission to sell short-term plans in Minnesota this year as last.

“I’m sympathetic to the people who are looking around for lower-cost coverage,” he said. “I just want to make sure that people aren’t fooling themselves, or being fooled.”

Joshua Haberman is a health insurance broker. He’s also the president of the Minnesota Association of Health Underwriters. Representing the trade group, Haberman advocates for more, not fewer, health insurance options. But as an agency owner, he does not steer customers to the short-term plans that some others are pushing so hard.

Haberman said consumers forgo critical ACA protections when they shop for alternative coverage.

“The fine print matters,” said Haberman.

Consumer advocates urge shoppers on the individual market to get help from MNsure or one of its certified brokers. They also underscore that while high-deductible plans can leave people on the hook for thousands of dollars in medical bills, they cap losses at several thousand dollars. Some of the less expensive alternatives can leave people holding the bill for hundreds of thousands of dollars — or even millions.

Teresa Boardman, the St. Paul real estate agent, is looking at critical illness insurance even though she knows that she could end up sick with an excluded condition.

“Something’s going to happen and it’s not going to be covered over the plan,” she said. “You know what? That’s too bad.”

“I mean, the way I look at our health care system right now, I don’t think I’m going to live to be nearly as old as my parents did,” Boardman said, frustrated.