How many are covered by short term medical insurance?

TA | September 4, 2008

Q: I have an inquiry about state short term medical / temporary insurance plans.  Do you have or know where I can find any information regarding enrollment numbers in these plans, i.e. estimates on how many people are currently enrolled in short term medical plans in a particular state?  For example, would you know how many individuals in Connecticut have short-term medical insurance or where I might find such numbers?

A: Insurance companies are not required to separately report the number of short term policies from the number of other health insurance policies, so published data is scarce. We are not aware that state insurance departments or the National Association of Insurance Commissioners (the source of many compiled insurance industry reports) publish this data either. The primary sources of much of our earlier data were the large national insurance agencies; these companies tend to be less willing to share proprietary information now.

In 2004 the founder of MedSave.com wrote "The number of short term medical policies issued online grew dramatically from less than 100,000 in 1997 to several million policies today. Short term medical insurance is the most popular type of health insurance issued to individual health plan applicants today." Note that this comment is expressed in terms of the number of policies issued which is higher than the number of people covered. An average short term policy is in force for only three months and a typical policyholder uses about four short term insurance policies over their lifetime to cover different periods without other insurance coverage so this explains why so many short term medical polices were written during those peak years when the U.S. health insurance crisis was at its worst. Since then the number of people covered by other plans has increased and the number of people covered by short term policies has declined.

Short term medical insurance is less popular today for several reasons: 1) the expansion of universal type health insurance that accepts all applicants through SCHIP programs, HIPAA and various state laws, 2) the surge in popularity of "mini-med" policies like Basic Health Insurance, Core Health Insurance and Value Benefits among young healthy people who formerly preferred short term medical insurance, 3) a narrowing of the cost difference between short term permanent renewable insurance through innovative commercial insurers like Celtic Insurance and Golden Rule Insurance and 4) more liberal eligibility and faster online issuance of other types of long term renewable insurance.

According to the 2007 annual report by the U.S. Census Bureau released on Aug. 26, 2008 only 8% of Americans are covered by health insurance purchased on their own. Based on this recent report, we feel that the number covered by short term medical insurance could be safely estimated at less than 2% of all Americans. Of course, this is only an estimate; sorry we can not be more precise.


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