The Biden administration has announced its plans to crack down on short-term health insurance plans, citing concerns that these plans often burden patients with substantial medical expenses.
Biden Administration Targets Short-Term Health Insurance Plans
According to CNN, in a proposed rule announced as part of a broader initiative to reduce healthcare costs, the administration aims to restrict the duration of these controversial short-term health insurance plans to three months, with an optional one-month extension.
Additionally, the proposal seeks to enforce clear explanations of benefits for consumers, as short-term plans typically offer less comprehensive coverage compared to other policies.
This move represents a significant reversal of former President Donald Trump‘s 2018 expansion of short-term health insurance plans, which extended their duration to nearly a year, allowing for renewal up to 36 months. The Trump administration’s decision was part of a series of measures aimed at dismantling the Affordable Care Act (ACA).
The Biden administration’s proposed rule on short-term health insurance plans is part of its broader efforts to reduce healthcare costs and eliminate surprise fees that burden middle- and working-class Americans.
In addition to the curtailment of short-term health insurance plans, the administration has announced new guidance to strengthen regulations protecting patients from surprise medical billing.
The Impact of Short-Term Plans
One of the primary concerns with short-term health insurance plans is that they are exempt from the consumer protections established by the ACA. Unlike comprehensive policies, these plans are not required to provide extensive coverage and can discriminate against individuals with pre-existing conditions.
The Trump administration praised them as a more affordable alternative to ACA policies, as their limited benefits often result in lower premiums. However, the Biden administration refers to them as “junk insurance” due to their potential to leave consumers with unexpected medical expenses.
Patients who purchase these short-term health insurance plans may not be fully aware of the limitations on coverage, leading to substantial out-of-pocket costs amounting to thousands of dollars.
Advocates of the ACA are concerned that short-term plans may lure younger and healthier individuals away from Obamacare policies, as these individuals may be enticed by the lower premiums and minimalist coverage offered by short-term plans.
This shift could potentially leave a larger proportion of older and sicker Americans in ACA marketplace plans, which may result in premium increases. The Biden administration aims to address this issue by curbing the appeal of short-term health insurance plans through their proposed rule.