CNN
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The Biden administration is cracking down on short-term health insurance plans it calls “junk insurance” that can leave patients struggling with large medical bills.
The rule, which was proposed last summer as part of a series of actions aimed at reducing health care costs, limits the length of new sales of these controversial plans to three months with the option to renew for a maximum of four months in total, the administration said Thursday. It also requires plans to provide consumers with clear explanations of their benefits, which are generally more scarce than Affordable Care Act policies, and inform them how to find more comprehensive coverage.
The move is the latest effort by President Joe Biden to contrast his approach to health care with that of former President Donald Trump, the presumptive Republican presidential nominee. Trump has extended the duration of short-term health insurance plans during his administration in an effort to weaken the Affordable Care Act.
“These junk insurance plans mislead consumers into thinking they are buying real health insurance,” White House domestic policy adviser Neera Tanden told reporters. “Then when people need medical care, they find that their plans limit their benefits, that their care is tied to a pre-existing condition, that their care is simply not covered at all.”
“Just when you need insurance the most, you’re stuck with a huge bill. It’s not real insurance, it’s a scam,” she continued, noting that Trump’s policy change “really hurts consumers.”
The rule largely reverses the former president’s 2018 expansion of short-term plans, which extended the duration of policies to just under a year and allowed them to be renewed for a total of up to 36 months. Those currently on short-term plans will see no changes to their policies.
Short-term plans don’t have to adhere to Obamacare’s consumer protections. For example, they are not required to provide comprehensive coverage and may discriminate against people with pre-existing conditions.
The Trump administration has touted them as a lower-cost alternative to Affordable Care Act policies because benefit caps and healthier enrollment pools allow short-term plans to carry lower premiums.
Supporters of the Affordable Care Act also worry that short-term plans could lure younger, healthier people away from Obamacare policies because those people are more likely to be attracted to minimalist coverage. That could leave a larger share of older, sicker Americans in marketplace plans, which could lead to premium increases.
In addition to the short-term health insurance rule, the Department of Health and Human Services on Wednesday unveiled a final rule that makes it easier to apply for and renew coverage in Medicaid and the Children’s Health Insurance Program, known as CHIP, by standardizing them across the country and making it easier for eligible children and adults to remain covered. It also extended some of the Affordable Care Act’s consumer protections for Medicaid and CHIP enrollees, including eliminating annual and lifetime limits on CHIP children’s coverage.
Children will no longer be excluded from CHIP coverage if their families cannot pay the premiums, and they will no longer be subject to a waiting period for coverage. In addition, the rule improves the transfer of children from Medicaid and CHIP when family income increases. And it prohibits states from doing renewals more often than every 12 months and requiring in-person interviews for seniors and people with disabilities.
The long-awaited cut to short-term plans is one of the Biden administration’s recent efforts to lower health care costs and reduce surprise junk bills, part of its agenda aimed at helping middle- and working-class Americans.
During his campaign, Biden highlighted differences in his approach to health care costs, including high drug prices.
A record number of people – more than 21 million – have signed up for 2024 coverage in the Affordable Care Act exchanges. Increased subsidies for federal premiums, which Democrats in Congress approved soon after Biden took office in 2021, lured many consumers to Obamacare policies. They expire at the end of next year.
In total, more than 45 million people gained coverage through the Affordable Care Act, according to the Biden administration.
Also, the president focused on his efforts to lower drug prices, primarily through the Inflation Reduction Act, including getting Medicare to negotiate drug prices for the first time and capping monthly insulin costs and annual out-of-pocket drug costs at Medicare enrollees.