There used to be a lot of health insurance horror stories like Charley Butler’s.
After the Montana truck driver was diagnosed with testicular cancer in 2016, his insurer balked at paying tens of thousands of dollars in medical bills and then moved to cancel his coverage over a preexisting medical condition.
These practices were largely banned by the Affordable Care Act, or Obamacare, which set new national health insurance standards to protect consumers and bar discrimination based on preexisting conditions.
But as the Trump administration has pushed to relax many of these rules, skimpier short-term health plans like the one Butler bought are roaring back, threatening to subject consumers to many of the ordeals patients endured before the healthcare law.
“Unfortunately, companies are taking advantage of the fact that consumer protections required by the Affordable Care Act don’t apply to these plans,” said former California Insurance Commissioner Dave Jones, who participated in several national investigations of short-term plans. “The kind of things we are seeing with these short-term plans look like what we used to see across the board.”
This includes misleading advertising, exclusions for preexisting conditions and often outright fraud.
Nearly every company involved in Butler’s health plan has paid settlements to regulators in recent years, according to regulatory filings from around the country and a review of hundreds of pages of records in a lawsuit Butler has filed in federal court in Montana.
In December, Health Insurance Innovations Inc., a Florida firm that promotes short-term plans, including the one Butler bought, agreed to pay $3.4 million to settle a 43-state investigation of the company’s sales and marketing practices.
“These plans can sound good,” said Sandy Praeger, a former Republican state insurance regulator in Kansas and onetime president of the National Assn. of Insurance Commissioners. “Like a time-share apartment, you may think you are getting a good deal. But if people get sick, they find they’re not covered.”
Butler, 36, said he had no inkling of his plan’s shortcomings when he was contacted in early 2016 by a representative from National Brokers of America Inc., a Pennsylvania company that sells short-term plans and has been sanctioned by insurance regulators in at least four states.
The broker — who unbeknownst to Butler had been convicted of assault and theft, according to Pennsylvania court records — assured Butler that the 11-month plan would protect him if he got sick. The monthly premium was just $146, far less than more comprehensive plans available on HealthCare.gov, the insurance marketplace created by the healthcare law.
“It seemed pretty straight-up at the time,” Butler recalled in an interview.
Misleading assurances are common, according to researchers who have found that marketing for short-term plans often obscures the limitations of the coverage.
In many cases, consumers don’t even think to ask if plans cover preexisting medical conditions, said Dania Palanker of the Georgetown University Center on Health Insurance Reforms.
“We are at a point now where people assume that all health insurance covers preexisting conditions,” Palanker said. “In the same way, you wouldn’t think to ask if a new car you are buying has seat belts.”
But short-term plans don’t have to offer the full set of benefits required under the 2010 law and can turn away sick customers by refusing to cover their preexisting conditions.
The plans also often cap how much medical care they will pay for, a practice that was banned on insurance marketplaces created by the health law.
At the end of Butler’s 25-page policy were 45 exclusions and limitations. These included no coverage for any preexisting medical condition, non-emergency joint replacements, foot care, mental health or substance abuse treatment, kidney disease or injuries sustained at work.
Such limitations make these short-term plans substantially cheaper than plans offered on the more regulated marketplaces. And Trump administration officials have billed them as a reliable option for Americans struggling to afford high premiums.
Despite warnings from patient advocates, physician groups and state regulators, the administration last year took a major step to promote short-term plans, issuing rules that allow consumers to renew them for up to three years. That reversed an effort by the Obama administration to phase out the plans by limiting them to just three months, a move President Obama made shortly before leaving office.
Butler assumed he would be safe with his policy when he enrolled in February 2016.
His insurance card, which he received from Health Insurance Innovations, identified his coverage as a “Premier” plan that offered services through a “MultiPlan Complementary Network,” which appeared to be the plan’s network of physicians and hospitals.
Butler didn’t know that the company that actually provided his plan — Kansas-based Unified Life Insurance Co. — a year later would agree to pay $2.8 million after an investigation by Massachusetts regulators into the deceptive and unlawful sale of its plans. Nor did he know about the investigation of Health Insurance Innovations.
Butler’s troubles began in August 2016 when he went to the doctor with pain in his groin and was diagnosed with testicular cancer that was ultimately found to have spread to his lungs.
Over the next six months, Butler underwent two surgeries and aggressive chemotherapy. It was a stressful time, Butler recalled, made worse when medical bills started arriving with no indication the insurance plan was paying anything.
He and his wife, Chole, were told they owed more than $3,000 to Butler’s surgeon, nearly $1,700 to the anesthesiologist and more than $20,000 to the hospital. Altogether, the bills would add up to more than $43,000.
Chole Butler, who was trying to navigate the deluge, tried calling the number on Butler’s insurance card. “I knew it wasn’t good when they started sending me from one department to another,” she said.
She was told claims were still being processed, the insurer needed more information or the medical providers didn’t file the right paperwork.
Then, more than two months after Butler started his treatment, Butler received a letter from the claims administrator working with Unified Life that demanded more information about his medical history.
The Butlers would learn later this was a so-called rescission review, a practice that insurance companies once regularly undertook to avoid paying customers’ medical claims by unearthing evidence of preexisting medical conditions that consumers failed to disclose when they bought the policy.
Rescission reviews were effectively eliminated by the 2010 healthcare law for more regulated plans, which cannot deny care for preexisting conditions.
Customers with the kind of short-term plan Butler bought are still subject to the practice, however. Unified’s claims administrator acknowledged in court papers that it routinely conducts rescission reviews on customers who get sick, during which medical bills are not paid.
The Butlers would also learn that his Unified plan had no network of doctors and hospitals, despite what his insurance card suggested.
That meant that any doctor or hospital where Butler sought care could bill him for the shortfall between the list price it charged for a service and the amount his insurer would actually pay, a practice known as balance billing.
Customers who buy more regulated marketplace plans that must offer a network are protected from balance billing.
“We didn’t know what the heck was going on,” Butler said.
Fortunately, Butler fared better with his medical care, and in 2017 his cancer went into remission. But as the dispute with the insurers dragged on, the Butlers were forced to hold a community fundraiser to pay off medical debt. Chole Butler was treated for stress.
Unified and its administrator finally began to pay bills more than six months after Butler was diagnosed, and only after the Butlers complained to Montana’s insurance department and hired an attorney.
“It’s inexcusable that a health insurance company would take premiums from someone like Charley Butler and then not even process the claims for months and months after he is diagnosed with cancer,” said the Butlers’ attorney, John Morrison, a former Montana insurance commissioner.
Unified declined through an attorney to publicly discuss details of the Butler case or the company’s short-term business, instead providing a statement that noted that Butler was never denied care for his cancer. “Unified is pleased that Mr. Butler’s successful cancer treatment resulted in complete remission,” the company said.
An attorney for National Brokers of America, which also would not discuss Butler’s case, said in a statement that the company and its representatives “comply with all laws related to the sale of insurance products.” Health Insurance Innovations did not respond to inquiries about the case.
However, former Oregon and Pennsylvania insurance commissioner Joel Ario, now managing director of Manatt Health, said stories like Butler’s offer a warning to those pushing to relax insurance rules even further.
“Some healthy people will benefit in the short run, but there are ugly trade-offs,” Ario said. “They include shady marketing that leaves people with unexpected bills trying to avoid bankruptcy or, worse, unable to even get care for themselves or their loved ones outside the emergency room. Insurance regulators will see a lot more of these heart-breaking cases.”
Butler is now paying $322 a month for a comprehensive plan on Montana’s insurance marketplace. That is twice what his short-term plan cost. But he said he’s done with skimpy coverage.