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 announced a draft regulation Friday that, once finalized, would limit temporary plans to four months instead of the current three-year maximum. It also would require more disclosure on coverage limits.
Before his East Room remarks, Biden was introduced by Cory Dowd, who said he had been billed more than $37,000 for an emergency appendectomy because his short-term plan covered only a fraction of the cost.
“It’s not necessarily about health care,” Biden said. “It’s about being played for a sucker.”
GOP Rep. Virginia Foxx, the chair of the House Education and Workforce Committee, said Biden is “taking a hatchet to consumer choice” while “propping up the costly, rigid plans offered under the Affordable Care Act.”
Biden also detailed steps aimed at making it harder for health care providers to get around a recent law protecting consumers from surprise medical bills and announced the administration is looking into the growing use of medical credit cards.
In addition, Biden touted a new federal estimate showing 1 out of 3 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 those for banking, travel and live entertainment.
White House domestic policy adviser Neera 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 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 have resulted in 1.5 million fewer people purchasing short-term plans each year. Of those, more than 500,000 would have bought full Obamacare plans, a small number would have been covered through an employer, and about 500,000 would have gone without insurance.
Under Biden’s proposed change, anyone now 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 was 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 were 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 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 review how the 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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