S. 8357(Seward)/A. 11485(Morelle)
Short Term Health Insurance
Summary: The bill amends the insurance law to establish a demonstration program to permit the issuance of a short term health insurance policy to recent college graduates and other children losing coverage as a dependent under a parent's policy. Specifics include:
- Section 3216 of the Insurance Law is amended to provide an exception to the prohibition against an insurer offering major medical, comprehensive or comparable coverage in the individual market that does not mirror the out-of-network benefits of the standardized direct payment HMO/POS contracts.
- A new Section 3216-a is added to the Insurance Law to authorize an insurer to offer a short-term health insurance policy to an “eligible individual.”
- An "eligible individual" is an unmarried resident of New York who is between 19 and 26 and is either a recent college graduate or has lost dependent eligibility under his patent's policy and who, is not eligible for coverage under an employer's plan.
- A “short-term health insurance policy” is required to have a defined term not to exceed twenty four months and must be community rated and open enrolled. The community rate, however, can be derived by considering only the pool of risks covered by the policy.
- Article 43 of the Insurance Law (applicable to not-for-profit plans and HMOs) is amended in a manner consistent with the Article 32 amendments noted herein.
- The Superintendent of Insurance is required to report to the Governor, the speaker of the assembly, the temporary president of the senate and the chairs of the insurance committees by April 1, 2013 on the effectiveness of the short-term health insurance policies and subscriber contracts in addressing the number of uninsured young adults and provide his recommendations on whether to continue the program.
Effective Date: Immediately, deemed repealed on December 31, 2013.
Last Action: Vetoed by the Governor on September 25, 2008 (Veto Memo #171).
VETO MESSAGE - No. 171
This bill would permit, until December 31, 2013, short-term health insurance policies for unmarried young adults residing in New York who are: (1) between the ages of 19 and 26; (2) recent college graduates or have lost coverage as a dependent under a parent's policy; and (3) not covered by or eligible for any employer-sponsored health benefits plan.
The purpose of this bill is laudable - to provide young adults with a reasonably priced alternative to the more expensive options currently available to them. However, the bill raises several issues of concern that prevent me from approving it. In particular, this bill would not permit all young adults to be covered through these short-term policies.
For example, young adults who do not attend college, do not receive coverage through a parent, age out of Child Health Plus, or are married, would not be eligible for coverage under this bill.
In addition, the bill would exclude several key benefits from the list of mandated coverages to be provided through these short-term policies. Benefits excluded from the mandated list include, maternity care, prescription drug benefits, treatment of diabetes, mammography screening, second opinion for treatment of cancer, certain mastectomy coverage, substance abuse treatment, enteral formulas, infertility, ambulance, and diagnostic screening for prostrate cancer.
Furthermore, there are no minimum benefit levels under the policy. This could cause coverage to vary widely from policy to policy and slip below the minimum standards for basic hospital and medical coverage. Indeed, there is nothing in the bill to prevent an insurer from issuing a policy with low fixed dollar benefit amounts that bear no relation to the actual expense of service rendered.
Finally, this bill may also have a detrimental impact on existing health plans. For example, the bill could attract healthy young adults away from Healthy NY and COBRA, thus negatively impacting claims experience and increasing health care costs for those still remaining in those programs.
The bill is disapproved. (signed) DAVID A. PATERSON