The Biden administration announced Thursday that it has finalized a new regulation that restricts the use of short-term health insurance plans that do not comply with the Affordable Care Act, reversing the Trump administration’s move to give consumers greater access to lower-cost but cheaper plans.
Under the new rule, short-term plans will only be able to last for 90 days, with a one-month extension for consumers.
In 2018, the Trump administration issued a rule allowing plans to last just under a year, renewable for a total of up to three years. Previously, under an Obama-era policy, plans could last no more than three months.
The plans, often with lower premiums than those found in the Affordable Care Act marketplaces, do not have to cover people with pre-existing conditions. They are also exempt from the health law’s requirement that plans offer a minimum set of benefits, such as prescription drug coverage and maternity care.
Democrats deride the so-called short-term, limited-duration plans as “junk” insurance, and the Obama-era policy was intended to ensure that healthy consumers couldn’t use that option to bypass Affordable Care Act purchases, leaving a sicker pool of clients enrolling in the comprehensive programs offered under the health law.
The White House put the new rule in place as a way to fortify the markets. In a briefing with reporters on Wednesday, Neera Tanden, President Biden’s domestic policy adviser, said that 45 million Americans were now covered through purchases or Medicaid expansion under the Affordable Care Act. More than 20 million people signed up for plans in the marketplaces during the most recent open enrollment period.
“President Biden is not taking his foot off the gas,” Ms Tanden said.
Proponents of short-term plans said the less expensive options are suitable for workers who move between jobs or those who can’t afford a purchase plan. Alex M. Azar II, who served as health and human services secretary under President Donald J. Trump, said in 2018 that the plans “can provide a much more affordable option for millions of forgotten men and women who are left out current system.”
But critics of the plans have warned that insurers can mislead consumers who enroll in them, including people who may be eligible for free coverage through the Affordable Care Act’s marketplaces. After the Trump administration issued its rule in 2018, some states moved on their own to restrict the sale of the plans. Democratic lawmakers urged the Biden administration to overturn the regulation, and the administration issued a proposed rule to do so last summer.
In its announcement Thursday, the White House cited a Montana man who racked up more than $40,000 in health care costs because his cancer was considered a pre-existing condition and a Pennsylvania woman who had undergone an amputation and received about $20,000 in bills that the her plan did not cover.
The new regulation also requires insurers to provide a disclaimer explaining what short-term plans cover.