Duration cut for temporary health plans
Short-term coverage will be available for only 90 days, similar to Obama rules
WASHINGTON — The Biden administration announced Thursday that it had finalized a new regulation that curbs the use of short-term health insurance plans that do not comply with the Affordable Care Act, reversing a move by the Trump administration to give consumers more access to cheaper but skimpier plans.
Under the new rule, the short-term plans will be able to last for only 90 days, with an option for a one-month extension.
In 2018, the Trump administration issued a rule allowing the plans to last for just under a year, with the option of renewing them for a total duration of up to three years. Previously, under an Obama-era policy, the plans were required to last less than three months.
The plans, often with lower premiums than those found on the Affordable Care Act’s marketplaces, do not have to cover people with preexisting conditions. They are also free 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 socalled short-term, limited-duration plans as “junk” insurance, and the Obama-era policy was meant to ensure that healthy consumers could not use that option to sidestep the Affordable Care Act’s marketplaces, leaving a sicker pool of customers enrolling in the comprehensive plans offered under the health law.
The White House cast the new rule as a way to fortify the marketplaces. In a briefing with reporters Wednesday, Neera Tanden, President Joe Biden’s domestic policy adviser, said that 45 million Americans were now covered through the marketplaces or the expansion of Medicaid under the Affordable Care Act. More than 20 million people signed up for plans on the marketplaces during the most recent open enrollment period.
“President Biden is not taking his foot off the gas,” Tanden said.
Supporters of the short-term plans have said that the less expensive options are well suited for people who are unable to afford a marketplace plan. Brian Blase, who worked on the 2018 rule as a White House official under President Donald Trump, said the plans were also ideal for contract and self-employed workers, including those with incomes too high to qualify for more generous subsidies on the Affordable Care Act’s marketplaces.
Blase said the new rule could cause insurers offering marketplace plans to face less competition. Sick consumers buying a three-month plan could also lose coverage without a better immediate option, he added. “Nobody benefits,” he said. But critics of the short-term plans have warned that insurers can mislead consumers who enroll in them, including people who might be eligible for free coverage through the Affordable Care Act’s marketplaces. The new regulation requires insurers to provide a disclaimer explaining what the short-term plans cover.
In its announcement Thursday, the White House cited a man in Montana who had accumulated more than $40,000 in health costs because his cancer was considered a preexisting condition, and a woman in Pennsylvania who had undergone an amputation and received roughly $20,000 in bills that her plan would not cover.
Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, said the plans often showed up prominently when consumers searched online for health insurance, with deceptive advertising.
Georgetown researchers last year conducted a so-called secret shopper study, calling 20 sales representatives to ask about health plans for people who had lost Medicaid coverage and were eligible for free marketplace plans. They found that none of the representatives mentioned the availability of the free plans. The brokers often used aggressive and misleading tactics to sell short-term plans without providing written plan information, the researchers found.