President Joe Biden is rolling back a Trump-era policy that expanded the availability of limited health insurance policies that are exempted from coverage requirements under the 2010 Affordable Care Act (ACA), also known as “Obamacare.”
These limited health insurance policies, commonly described as “short-term” policies and referred to by President Biden as “junk health insurance,” are policies that may provide a limited range of coverage.
These limited health insurance policies are exempt from many of the regulations established under the ACA, and may not cover as broad a range of medical practices or individuals with preexisting conditions. A selling point of these limited policies is that they typically carry lower premiums than the types of plans that would qualify under the ACA framework.
Under President Barack Obama, individuals could only be covered through these limited insurance plans for three months. In 2018, however, the Trump administration approved a new rule allowing people to obtain coverage under these limited policies for an initial period of 12 months, with the ability to extend the coverage for up to 36 months.
On Thursday, the Biden administration announced a rule that largely reverts back to the Obama-era constraints, capping the duration of these limited insurance policies to three months with the ability to extend the policies for one additional month.
Affordable Option or ‘Scam’ Insurance
The Trump administration argued that its 2018 decision to extend the coverage period for these limited health insurance policies would help make insurance more affordable for more Americans who would need to find individual coverage plans.
“Under the Affordable Care Act, Americans have seen insurance premiums rise and choices dwindle,” Trump-era Health and Human Services Secretary Alex Azar said in 2018. “President Trump is bringing more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
Those needing individual coverage plans can include people who are between jobs, the self-employed, those who work for small companies that don’t meet the ACA’s employer insurance mandate, students taking time off from school, those who retire before the Medicare eligibility age, and other individuals who don’t qualify for government-subsidized health insurance.
Announcing their 2018 policy decision, a Trump administration press statement estimated an average monthly premium for an individual using one of these limited insurance policies in the fourth quarter of 2016 was $124, compared to $393 for an unsubsidized plan on the ACA’s individual market during the same time period.
The Biden administration contends that many of these limited insurance plans that don’t cover certain medical scenarios are simply junk. Announcing the rule change on Thursday, the Biden White House raised the example of who had to pay $43,000 for his cancer treatment after the insurer providing his limited plan concluded his illness was a preexisting condition.
The Biden White House noted another example of a Villanova adjunct professor who has to contend with about $19,000 in bills for an amputation that wasn’t covered under her limited plan.
“As the President has said, people hate being played for suckers and the current practice of offering low-quality insurance that people pay into, but then provides no coverage when people need it, is a bait and switch,” the White House said Thursday. “That’s why the Biden-Harris Administration is issuing a final rule that protects consumers from junk health insurance and makes sure Americans aren’t scammed into low-quality coverage that leaves consumers on the hook for thousands of dollars in medical bills or denies life-saving care right before treatment.”
The Biden White House said the new insurance rules mean “‘short-term’ plans must be truly short-term” and insurers who provide these plans have to more clearly disclose the limitations of these policies.
“These actions will reduce scam insurance plans that offer really no insurance at all,” the White House said.