The Biden administration plans to roll back a cornerstone of former President Donald Trump’s health policy agenda, short-term health insurance.
Short-term health insurance plans offer limited benefits and lower monthly premiums, but deny coverage for pre-existing medical conditions.
Under the new rule finalized last week, the Biden administration will reduce the duration of short-term health insurance plans to three months with a one-month renewal option. Companies that sell short-term plans must also provide consumers with a disclaimer detailing service limits and the amounts the plans cover. The rule reverses a 2018 Trump administration policy that allowed consumers to stay on short-term plans for up to three years.
These plans were designed to provide a short-term option for consumers who don’t have coverage from an employer or another source, but experts warn they offer meager coverage and can leave consumers with unpaid medical bills . The White House referred to those plans as “junk insurance” and noted in a fact sheet that the new rule would ensure Americans aren’t “scammed out of low-quality coverage that leaves consumers on the hook for thousands of dollars in medical bills” situations where they are denied care.
Short-term plans don’t offer the same protections as Affordable Care Act plans, which require insurers to cover a range of standard benefits, including emergency, maternity and mental health care. And unlike short-term plans, Obamacare plans cannot deny coverage based on a person’s pre-existing medical conditions.
Biden’s new rule, which will take effect June 17, is a return to the Obama administration’s policy, which limited the sale of short-term plans to 90-day periods as a gap between more robust plans.
U.S. Department of Health and Human Services Secretary Xavier Becerra said the rule “is cracking down on junk insurance plans to help consumers make informed decisions and avoid mistakenly paying for a plan that doesn’t offer them the coverage or the protection they expect.”
Sabrina Corlette, founder and co-director of the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy, said the policy aims to inform consumers about the differences between short-term plans and longer-term coverage. provided through the Affordable Care Act.
“It’s a clear repudiation of the Trump administration’s policy regarding short-term plans,” Corlette said.
Biden promotes health agenda
The restriction on short-term insurance plans comes as the Biden administration works to strengthen the federal and state marketplaces of the Affordable Care Act, which saw record enrollment with more than 21 million people enrolled this year. Most working-age people get health insurance through their employers, while older, low-income, and disabled Americans are often covered through the government health insurance programs Medicare and Medicaid.
Also this week, Biden and his 2020 challenger, Sen. Bernie Sanders, teamed up to promote lower prescription drug costs for older Americans, either through legislation or the bully pulpit. Biden’s Inflation Reduction Act empowers Medicare to negotiate prices for some prescription drugs, caps insulin costs at $35 a month for Medicare enrollees and limits out-of-pocket spending for some drugs administered by the doctor.
Sanders, an independent, has called drug company executives to appear before a Senate committee he chairs to defend their drug prices. The president praised the Vermont senator’s dogged efforts on behalf of patients.
“With Bernies’ help, they were showing how health care should be a right and not a privilege in America,” Biden said during an appearance Wednesday, discussing efforts to curb prescription drug spending.
Short term plans popular with contractors, gig workers
Proponents of the short-term plans say they offer options for healthier adults who want more affordable options for health insurance.
Ronnell Nolan, CEO of Health Agents for America, a trade association that represents independent health insurance agents, said limiting short-term plans to three months, plus an optional quarter, means consumers would have fewer options in the ‘time to buy health insurance.
“Every American deserves to choose for themselves what kind of product works for them,” said Nolan, an insurance agent in Louisiana.
Brian Blase, a White House adviser during the Trump administration, said shortening the duration of short-term plans will create headaches for middle-class Americans who rely on this type of insurance. He said the plans are popular among cost-conscious consumers, such as independent contractors or gig workers who earn too much to qualify for ACA subsidies and don’t get coverage through an employer.
“People spend their own money on these plans,” said Blase, who now serves as president of the Paragon Health Institute, a health policy think tank. “There’s no subsidy on short-term plans, so people have incentives to make sure the plans offer them value.”
Blase predicted that the new rule would effectively increase the number of Americans without insurance. The Biden administration has touted efforts to lower the nation’s uninsured rate, in part through pandemic-era policies that offered more generous subsidies for people enrolled in ACA plans.
In 2020, the House Energy and Commerce Committee estimated that about 3 million people were enrolled in a short-term plan in 2019. The committee’s report, which examined eight short-term health plans, found that these insurers had limited coverage for patients’ existing medical conditions. and spent 48% of premium dollars on medical claims. In comparison, individual ACA plans must spend at least 80% of premium dollars on medical claims.
Georgetown’s Corlette noted that short-term plans would still be available for purchase under the Biden rule. But he said the protections mean they will no longer be “misleadingly marketed as a comprehensive, ACA-compliant insurance plan.”
Ken Alltucker is at X, formerly Twitter, at@kalltucker, or he can be emailed at alltuck@usatoday.com.
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