The Biden administration has implemented new rules limiting the duration of short-term health insurance plans, which they refer to as “junk insurance” that can result in steep medical costs for patients. The plans will now only be able to be sold for up to three months, with the option of renewal for a maximum of four months total. The administration aims to provide clearer explanations of the benefits of these plans, which are typically less comprehensive than those offered through the Affordable Care Act, and guide consumers on how to access more robust coverage options.
President Biden’s actions are in stark contrast to those of former President Trump, who extended short-term health insurance plans during his administration to weaken the Affordable Care Act. The Biden administration views these plans as misleading consumers and ultimately leaving them with inadequate coverage when they need it most. The new rules aim to prevent consumers from being left with excessive bills due to coverage limitations on preexisting conditions or capped benefits, labeling such practices as a scam that harms consumers.
The recent changes largely reverse the expansions made by the Trump administration in 2018, which allowed short-term plans to be sold for nearly a year and renewed for a total of up to 36 months. Short-term plans do not have to adhere to the consumer protections outlined in the Affordable Care Act, such as providing comprehensive coverage and prohibiting discrimination against those with preexisting conditions. The Trump administration believed these plans to be a more affordable alternative to ACA policies due to lower premiums.
Supporters of the Affordable Care Act are concerned that short-term plans may attract younger, healthier individuals away from ACA policies, potentially leading to higher premiums for older, sicker enrollees. This shift could impact the overall marketplace and trigger premium increases. In addition to the changes to short-term health insurance plans, the Department of Health and Human Services has introduced new rules aimed at simplifying the process of applying for and renewing coverage in Medicaid and CHIP, extending consumer protections from the ACA to these programs.
The Biden administration’s efforts to lower health care costs and address surprise fees align with its agenda to support middle- and working-class Americans. President Biden has emphasized these efforts on the campaign trail, specifically in regards to tackling high drug prices. A record number of people have signed up for 2024 coverage through the Affordable Care Act exchanges, largely due to enhanced federal premium subsidies introduced by congressional Democrats after Biden took office. Over 45 million people have gained coverage through the ACA under Biden’s administration, and he has also focused on reducing drug prices through initiatives like the Inflation Reduction Act, which includes Medicare negotiating drug prices for the first time and capping costs for certain medications.
