The new regulation reverses a Trump-era policy that expanded access to health plans with fewer benefits than those sold on the Affordable Care Act’s marketplaces.
The Biden administration announced on 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 for 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 pre-existing conditions. They are also free from the health law’s requirement that plans offer a minimum set of benefits, like 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 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.
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They are also free from the health law’s requirement that plans offer a minimum set of benefits, like 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 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.
In a briefing with reporters on Wednesday, Neera Tanden, President 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.
Brian Blase, who worked on the 2018 rule as a White House official under President Donald J. 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.
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 marketplaces.
In its announcement on Thursday, the White House cited a man in Montana who accumulated over $40,000 in health costs because his cancer was considered a pre-existing condition, and a woman in Pennsylvania who underwent an amputation and received roughly $20,000 in bills that her plan would not cover.
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