BEYOND THE NUMBERS
Kansas Governor Laura Kelly should veto a bill that would let the state’s Farm Bureau sell unregulated health plans to Kansans. That’s because the plans would likely deny coverage and charge higher premiums to people with pre-existing health conditions, omit essential benefits such as maternity care, and impose annual or lifetime dollar limits on coverage.
The bill, which the legislature approved last week, defines Farm Bureau health plans as not health insurance, exempting them from the Affordable Care Act’s (ACA) protections for people with pre-existing conditions and other consumer protections. That means people buying these plans may find themselves exposed to catastrophic costs if they get sick, which has already happened to those who bought of other types of substandard plans. The plans’ lower premiums will also pull healthy people out of the broader individual market, raising premiums for people who remain in that market and need comprehensive coverage.
Only two other states allow such plans: Iowa, which passed legislation similar to the Kansas bill in 2018, and Tennessee, which has allowed unregulated Farm Bureau plans since the early 1990s. The Kansas bill would also roll back standards related to association health plans (AHPs), another form of coverage exempt from many ACA rules.
The Kansas Farm Bureau has made clear that it will take full advantage of the exemption from ACA standards. It says its plans would not be “guaranteed issue,” meaning they would deny applicants based on their pre-existing conditions and medical history. Each applicant would be “fully underwritten,” meaning they would have to answer extensive questions about their health and could be charged more even if they’re accepted for coverage. The Farm Bureau also says their plans may not include all essential health benefits, such as maternity care, and wouldn’t be limited to people working in agriculture.
We’ve seen all this play out in Iowa and Tennessee. In Iowa, applicants for Farm Bureau health plans must disclose whether they’ve had any of 16 categories of medical conditions in the past five years and, if so, provide additional details such as blood pressure readings, medication lists, their doctors’ names, and their medical records. The Iowa plans also cap enrollees’ lifetime benefits at $3 million, which the ACA doesn’t allow. In Tennessee, the Farm Bureau application is 13 pages long and includes numerous questions about applicants’ health issues in the last seven years; even babies must have medical information submitted to be enrolled.
Beyond that, details about Kansas Farm Bureau plans are scarce and will likely remain so even if they become a reality, since they’d also be exempt from ACA transparency requirements and wouldn’t have to inform insurance regulators or the public about plan benefits, cost-sharing charges, or how they set premiums. Nor would the Farm Bureau have to disclose how much more it would charge certain groups (such as women, older people, and workers with risky jobs) compared to others and which pre-existing conditions would trigger coverage denials or higher premiums.
The Kansas bill is one of several state and federal efforts to spread substandard health plans – including short-term health plans and AHPs. Trump Administration changes weakening the rules for short-term plans and AHPs and Congress’ elimination of the ACA penalty for individuals who don’t obtain coverage have prompted insurers and brokers to aggressively market subpar plans. Already, some enrollees in such coverage are experiencing high out-of-pocket costs when they get sick, such as a Philadelphia woman who bought a very limited hospital indemnity plan, needed surgery, and found herself with $19,000 in medical debt, and a California man whose short-term health plan stuck him with huge medical debt after he was treated for cancer.
Not all states are allowing substandard plans to proliferate. In North Carolina, a bipartisan House majority rejected a bill last year allowing unregulated Farm Bureau plans. In Montana, Governor Steve Bullock vetoed a bill last month weakening standards for AHPs. In Virginia, Governor Ralph Northam has so far rejected three bills loosening rules for AHPs and letting the Farm Bureau and other entities offer unregulated health plans through a “benefits consortium.” And such other states as California, Colorado, Illinois, and Maryland have set their own protections against short-term plans in response to the federal effort to expand them.
Supporters of the Farm Bureau plans say they will be “just another option,” as Kansas House Majority Leader Dan Hawkins put it. But creating a new market where plans deny coverage or charge more to people with pre-existing conditions is far from benign. As noted, the Farm Bureau plans will lure healthy enrollees away from the state’s individual insurance market, raising premiums for ACA plans; that will particularly affect middle-income people with pre-existing conditions who can’t buy a Farm Bureau plan and don’t qualify for subsidies through the ACA marketplace. Also, two-thirds of uninsured Kansans have low incomes, as do many uninsured farmers and farmworkers; substandard plans likely won’t be affordable or adequate for them.
Kansas should hit pause on Farm Bureau plans and consider better policies — including adopting the ACA’s Medicaid expansion to more low-income adults — that would help far more people without such negative consequences.