Biden nixes Trump’s short-term so-called ‘junk’ health insurance rule

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 less expensive monthly premiums but deny coverage for previously existing medical conditions.

Under the new rule finalized last week, the Biden administration will cut 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 the limits of services and amounts the plans cover. The rule reverses a 2018 Trump administration policy that allowed consumers to remain on short-term plans for up to three years.

These plans were designed to offer a short-term option for consumers who do not have coverage from an employer or other source, however, experts warn they offer skimpy coverage and can leave consumers with unpaid medical bills. The White House referred to these plans as “junk insurance,” noting in a fact sheet that the new rule would ensure Americans aren’t “scammed into low-quality coverage that leaves consumers on the hook for thousands of dollars in medical bills” and put in 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 such as emergency, maternity and mental health care. And unlike short-term plans, Obamacare plans cannot deny coverage based on a person’s previously existing medical conditions.

Biden’s new rule, which takes 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 stop-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 choices and avoid mistakenly paying for a plan that does not provide them the coverage or 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 differences between short-term plans and more robust coverage offered through the Affordable Care Act.

“It’s a clear repudiation of the Trump administration’s policy with respect to short-term plans,” said Corlette.

Biden touts health agenda

The restriction on short-term insurance plans comes as the Biden administration works to shore up the Affordable Care Act federal and state marketplaces, which showed record enrollment – with more than 21 million people signing up this year. Most working-age people get health insurance through their employers while older, low-income and disabled Americans often get covered through the government health insurance programs Medicare and Medicaid.

Also this week, Biden and his 2020 rival Sen. Bernie Sanders teamed up to tout lower prescription drug costs for older Americans, whether 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 per month for Medicare enrollees and limits out-of-pocket spending for some doctor-administered drugs.

Sanders, an Independent, has summoned pharmaceutical company executives to appear before a Senate committee he chairs to defend their drug prices. The president lauded the Vermont senator’s dogged effort on behalf of patients.

“With Bernie’s help, we’re showing how healthcare ought to be a right and not a privilege in America,” Biden said during an appearance Wednesday, discussing efforts to rein in prescription drug spending.

Short-term plans popular with contractors, gig workers

Advocates of short-term plans say they provide options for healthier adults who want more affordable choices for health insurance.

Ronnell Nolan, CEO of Health Agents for America, a trade association representing independent health insurance agents, said limiting short-term plans to three months, plus an optional fourth, means consumers would have fewer choices when shopping for health insurance.

“Every American deserves to make a choice for themselves on what type 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 with 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 Paragon Health Institute, a health policy think tank. “There’s no subsidy on short-term plans, so people have incentive to make sure the plans offer them value.”

Blase predicted the new rule would effectively increase the number of uninsured Americans. 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 report, which examined eight short-term health plans, found these insurers limited coverage for patients’ existing medical conditions and spent 48% of premium dollars on medical claims. By comparison, ACA individual plans must spend at least 80% of premium dollars on medical claims.

Corlette, of Georgetown, noted that short-term plans will still be available for purchase under the Biden rule. But she said the protections mean they will no longer be “deceptively marketed as a comprehensive, ACA-compliant insurance plan.”

Ken Alltucker is on X, formerly Twitter, at @kalltucker, or can be emailed at alltuck@.com.