WASHINGTON − President Joe Biden is cracking down on what the White House calls “junk” health insurance plans – namely, less-robust and short-term coverage that the Trump administration expanded as a cheaper alternative to Obamacare plans.
Insurance rules set by the Affordable Care Act, for example, require plans to cover pre-existing conditions. That’s not the case for the short-term plans, which can deny comprehensive coverage when people switch jobs and still need temporary health care coverage.
The Trump administration had argued that the short-term plans were a more affordable option that might appeal to temporary contractors and gig-economy workers who don’t get health insurance through a job.
Biden will announce Friday a draft regulation which, once finalized, would limit temporary plans to four months instead of the current three-year maximum. It would also require more disclosure on coverage limits.
“This rule would help make these plans fairer and help ensure that consumers know what they’re getting when they sign up for insurance,” said White House domestic policy advisor Neera Tanden. “When they don’t know what they’re getting and get these gigantic bills, they can feel like it’s a scam.”
Biden is also expected to detail steps aimed at making it harder for health care providers to get around a recent law protecting consumers from surprise medical bills and to announce the administration is looking into the growing use of medical credit cards.
And, Biden will tout a new federal estimate showing one out of three Medicare beneficiaries will save an average $400 a year on prescription drugs when a cap on out-of-pocket expenses begins in 2025.
The White House says the actions build on the president’s promise to lower health care costs for millions of Americans and on his battle to eliminate various types of “junk fees” − including banking, travel and live entertainment.
Tanden cited the example of a Montana man stuck with a $43,000 health care bill because his insurance company said his cancer was a pre-existing condition, according to a 2019 article by the Los Angeles Times.
“That’s not real insurance,” she said. “That’s junk insurance.”
Here’s what to expect:
Limiting ‘junk’ insurance
The Obama administration had limited the sale of short-term plans to 90-day periods, intending them to be used when people are transitioning from one source of coverage to another, such as when they are in between jobs.
In addition to not covering pre-existing conditions, short-term plans don’t have to cover other benefits required by the ACA and can limit how much care is paid for.
But as the Trump administration looked for ways to “repeal and replace” the ACA, the maximum length was expanded to three years.
The Biden administration argues the plans too often leave families surprised by thousands of dollars in bills when their health care isn’t covered.
The Congressional Budget Office estimated in 2019 that unsuccessful legislation to block Trump’s expansion would’ve resulted in 1.5 million fewer people purchasing short-term plans each year. Of those, more than 500,000 would’ve bought full Obamacare plans, a small number would’ve been covered through an employer and about 500,000 would’ve gone without insurance.
Under Biden’s proposed change, anyone currently enrolled in a short-term plan would be able to stay on it for the original coverage limit but would be subject to the new rules when their plan expires.
Restoring a tight limit to the short-term plans is one of the final pieces of Biden’s agenda to reinvigorate the ACA, according to Larry Levitt, executive vice president for health policy at KFF, a nonpartisan health research organization.
“And,” he tweeted, “it’s taken a long time.”
Closing `loopholes’ to stop surprise medical bills
The bipartisan “No Surprises Act” that took effect last year intended to protect patients from unexpectedly large bills when a doctor or other provider wasn’t part of their insurer’s network.
But Tanden says some plans and providers are trying to evade the rules by changing the terms they use in their contracts to argue, for example, that a hospital is not technically “in-network.”
“Frankly, what they are doing is gaming the system,” she said. “This is not allowed and as our guidance will describe, it must end.”
Health care services will have to either be covered by the protections of the “No Surprises Act” or, if they are considered in-network, be subject to the Affordable Care Act’s annual limit on how much a consumer must pay out-of-pocket.
Investigating medical credit cards
Administration officials said they have a lot of questions about the increasing use of third-party medical credit cards and loans being used to pay for care. The cards often include teaser rates and deferred interest features that can make them more costly, according to the White House. Also, consumers may not fully understand the terms.
A joint review by the Consumer Financial Protection Bureau, the Treasury Department and the Department of Health and Human Services will look at how they products are being sold and how the debt is being collected.
“Financial firms are partnering with health care players to push products that can drive patients deep into debt,” said Rohit Chopra, director of the Consumer Financial Protection Bureau.
Reducing Medicare drug costs
While pushing new actions, Biden is also touting savings to seniors from last year’s health care, climate change and tax bill. Under the Inflation Reduction Act, out-of-pocket costs for Medicare’s prescription drug plan are capped at $2,000 a year beginning in 2025.
Nearly 19 million seniors and other Medicare beneficiaries will save an average $400 a year, according to the Department of Health and Human Services. The nearly 2 million enrollees with the highest drug costs will save an average of $2,500 a year.
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