On June 29, the Massachusetts Division of Insurance (DOI) released a report finding that the number of individuals purchasing insurance only for the duration of their care increased from 3,508 in 2006 to 17,177 in 2008.  The report asserts that the increase in short-term insurance purchasers results from changes made by the state’s 2006 health care reform law.  The law combined the small-group and individual insurance markets to lower the cost of individual insurance plans.  Following the change, insurers reported rising numbers of short-term, high-cost members.  DOI estimates that short-term purchases cost the state’s health care system $300 million annually.  The report suggests that the trend forces traditionally insured residents to pay more for their health care and recommends instituting a limited open enrollment period to prevent the practice.

From the report:

In the summer of 2009, health carriers notified the Division of Insurance (the Division) that they were experiencing spikes in utilization among individual members who were newly enrolled under the Merged Market. The health carriers indicated that more individuals were terminating coverage after having expensive medical procedures. The Division’s Health Care Access Bureau (HCAB) engaged Oliver Wyman to analyze the claims experience of individuals in the non-group market prior to and after the merger. In order to perform this duty, Oliver Wyman collected and analyzed claims data with dates of service from January 1, 2006 through December 31, 2006 and from January 1, 2008 to December 31, 2008, testing whether increased adverse selection may have been an unintended consequence of the merger of the non-group and small group markets.

Massachusetts Division of Insurance. (2010). An analysis of individual health coverage in Massachusetts Before and After the July 1, 2007 merger of the small group and non-group health insurance markets (PDF|150.7 MB). Welch, D.K. and Giesa, K.