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Will People Game The System With Short Term Health Insurance?

(Image: Darwin Bell under CC 3.0)

Healthcare reform, including the employer and individual health insurance mandate, is very controversial. A recent report from Massachusetts exposes why, as unpleasant as it sounds, a mandate may be necessary. Supporters of the mandate have warned that without it, consumers would forgo coverage when they were healthy and buy health insurance plans only when they got sick–actions that completely upend the insurance industry.

It turns out that last year, several hundred individuals took advantage of reforms in Massachusetts through short term health insurance. From Blue Cross Blue Shield alone, they purchased coverage for periods of three months or less, yet filed extremely costly claims. Although they paid an average of $400 a month in health insurance premiums, their average monthly claims were over $2,000!

This example should inspire the federal government to write regulations combating the practice. Waiting periods for certain costly pre-planned treatments (such as knee surgery or fertility services) may be the solution. The purchase of temporary health insurance could also be limited to twice a year, barring major life changes.

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