President Joe Biden announced new measures Thursday to protect consumers who buy short-term health insurance plans that critics say amount to junk.
New rules finalized by the Democratic presidential administration would limit such programs to just three months. And the plan can be renewed for up to four months, rather than the three-year maximum allowed under Biden's Republican predecessor, Donald Trump.
The Biden administration is also calling for a short-term plan to provide consumers with clear explanations about benefit limits.
The White House said the rule is part of Biden's much-touted effort to reduce consumer costs in his bid for re-election in November.
Neera Tanden, Biden's domestic policy adviser, said in a call arranged by the White House to discuss the rule with reporters that the president “really believes that the American people don't want to be fooled. “Junk insurance makes the people fools.''
Short-term insurance is temporary and provides a safety net if a consumer changes jobs or retires before becoming eligible for Medicare.
But short-term plans, which critics call “junk insurance,” too often mislead consumers into thinking they're buying comprehensive health insurance, Tanden said. Consumers may be surprised to find that benefits are capped or that certain coverages are not provided when they later try to obtain insurance.
Tanden said Trump and other Republicans have exploited loopholes in the Affordable Care Act by allowing insurance companies to sell short-term plans that surprise consumers with thousands of dollars in medical bills. He said that he had suffered a loss.
The ACA was signed by President Barack Obama in 2010. Biden and his administration this week marked the 14th anniversary of the landmark legislation.
Short-term plans were expanded in 2018 under the Trump administration as a cheaper alternative to the Affordable Care Act's expensive comprehensive insurance. President Trump, who had promised to repeal and replace the law, praised the short-term plan as “a much lower cost of health care.”
In 2020, a divided federal appeals court upheld the Trump administration's expansion of the short-term health insurance program.
The U.S. Court of Appeals for the District of Columbia Circuit said the Trump administration had legal authority to extend the health plan from three months to 12 months, with an option to renew it for 36 months. The plan does not have to cover people with pre-existing conditions or provide basic benefits like prescription drugs.
