Biden’s Administration Proposes Limit on Skimpy Health Insurance Plans

The White House is attempting to limit the use of low-cost health plans that former President Donald Trump promoted as an affordable option during his administration — and those Democrats, including Vice President Joe Biden, have slammed for years as rubbish.

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The proposal, which will be included in a presidential announcement on Friday, comes after congressional Democrats and consumer-health advocates have pressed Biden for as long as he has been in office to follow through on a long-standing pledge to reverse his predecessor’s expansion of short-term health plans, which are designed as limited-duration products.

The plan is the latest in a series of ideological shifts that will have far-reaching consequences for consumers. For than a decade, lawmakers, lobbyists, and ideological organizations have disputed what is best for consumers who purchase coverage on their own rather than receiving benefits from their employer. Conservatives who have fought the Affordable Care Act since its inception in 2010 argue that these consumers are entitled to easy access to health plans that offer limited coverage at a low monthly cost. However, ACA supporters argue that such arrangements can end up costing patients more in the long term while undermining the goal of helping more Americans obtain comprehensive medical insurance.

In exchange for limited benefits, short-term plans charge cheaper monthly costs than traditional kinds of health insurance. The plans do not comply with the Affordable Care Act’s consumer protections, such as equal treatment of customers with previous medical problems and 10 categories of health coverage, such as maternity care, mental health services, or prescription medicines. The plans sometimes set yearly coverage limits.

Short-term plans were designed to serve as a bridge for consumers who found themselves in a tough situation, such as a brief break between jobs that give health coverage. In 2016, the Obama administration shortened the programs’ length to three months.

Trump expanded the plans’ availability in 2018, allowing users to carry them for 12 months at a time and then renew them for up to three years. Trump’s top health advisers said the plans would be acceptable for families that do not require extensive medical care. Critics objected that consumers risked being saddled with significant medical bills after their inadequate coverage expired. There is no accurate data on the number of Americans who have purchased such plans.

In recent years, about half of the states have effectively prohibited or limited the sale of such plans to the previous three-month maximum. The proposed restrictions by the present government would be a national reversal of Trump’s policies.

The proposal would not revert exactly to the Obama-era version — but would be close. Consumers could buy a short-term plan for three months and could extend for a fourth month, according to senior administration officials who briefed reporters before the announcement. The rules would apply to people who buy short-term plans in the future, while those who already have the skimpy insurance could keep it under the current rules.

The officials said the proposal will probably reach a final form later this year, after time for the public to comment on it.

Biden, who believes that the ACA should be the foundation for improvements in health-care prices and access, is one of many Democrats who believe that short-term plans should play a far smaller role. Despite calls from fellow Democrats and advocates to go faster, his administration has yet to act on that premise.

A senior administration official dodged the topic of why the proposed rules regulating short-term health insurance took so long to develop.

“Look, the president is laser-focused on the vision of building the economy from the middle out and the bottom up, and we’ve been working from day one of this administration to ensure that more people have access to affordable health care,” the official said.

Noting that the percentage of uninsured Americans has decreased during Biden’s tenure, while the number of people covered by private ACA health plans has reached an all-time high, the official stated, “This rule is another step in our work to bring down costs for American families.”

The idea on stingy health-care plans is one of four moves highlighted by the White House on Friday that it says illustrate Biden’s dedication on cutting health-care costs — a long-standing concern of his that has taken on new relevance now that he is pursuing a second term in the White House.

Other aspects are works in progress.

One will be a three-agency investigation of the use and marketing of specialist financial products such as medical credit cards and installment loans. According to officials, these methods appear to be pushed on patients as a way to pay for normal medical care, with increasing interest rates and growing medical debt.

Another measure includes additional details on a recent law intended to protect patients from huge, unexpected medical expenses. The safeguards were adopted as part of a pandemic relief statute passed in 2020, prior to Biden’s presidency. They went into effect in early 2022, and Biden’s health staff have developed instructions on how the bill will be implemented.

The medical billing law is meant to financially safeguard patients who go to emergency rooms or require various sorts of medical care without recognizing that the doctors treating them are not in their insurance network. The new policy, according to top administration officials, is meant to discourage health-care organizations and practitioners from exploiting loopholes that might disguise whether patients are receiving pricey care outside of their insurance network.

The administration also released a report from the Health and Human Services Department forecasting the number of older Americans and individuals with disabilities who will save money on Medicare drug coverage once a $2,000 annual cap on out-of-pocket prescription medication spending goes into effect in 2025. That eventual ceiling was included in the Inflation Reduction Act, which was passed a year ago.

According to the HHS report, over 19 million Medicare beneficiaries will save an average of $400 each year. According to the research, the cap will lower Medicare enrollees’ prescription spending by around $7.4 billion each year.

The idea to limit short-term health plans fueled the dispute that has long surrounded this type of insurance.

Conservative health policy experts who have opposed the ACA since its inception in 2010 slammed the Biden administration’s proposal.

“Short-term plans provide quality, affordable coverage for millions of people, reduce the number of uninsured, help people who get sick, and — contrary to critics — do nothing to undermine” the ACA insurance marketplace, said Brian Blase, the Trump White House economic policy adviser who led the effort to expand the availability of such plans.

If short-term plans are limited to four months, Michael F. Cannon, director of health policy research at the libertarian Cato Institute, predicts that some consumers would be left without insurance. People who grow ill while uninsured for many months could “face sky-high medical bills” depending on when their coverage expires during the year, he warned. This is because people may only get ACA marketplace insurance, which the current administration supports, during a late-year enrollment period. According to Cannon’s proposal, customers in that situation would not be eligible for a special enrollment period to obtain ACA coverage sooner.

Keep US Covered, a pro-ACA group that has encouraged Biden to limit the use of short-term insurance, hailed the suggestion.

“With this decision, President Biden has made progress toward improving health equity,” said Sonja Nesbit, a senior adviser to Keep US Covered and an Obama health official. Nesbit said in a statement that the Trump-era rule “flooded the market with low-quality insurance plans that skirt patient protections,” but that “today, our health care system is stronger, and American families can have more confidence in their coverage.”

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