Biden reverses Trump-era limits on short-term health plans

President Joe Biden wants skimpy, short-term health coverage to last no more than four months, reversing a Trump-era regulation.

HHS, the Treasury Department and the Department of Labor issued proposed rules on Friday that clamp down on short-term limited duration health plans, which offer cheap but sparse coverage that Democrats deride as “junk insurance.” The rule, which is meant to protect consumers and bolster the Obamacare exchange, would overturn a 2018 Trump-era regulation and satisfies liberal lawmakers and patient groups who have demanded the administration act since its first days in the White House.

“Short-term plans are intended to provide temporary coverage as people transition from one source of coverage to another,” said Neera Tanden, White House domestic policy adviser, on a call with reporters Thursday. “Under the previous administration, however, companies were able to take advantage of loopholes and sell junk insurance for much longer than intended.”

The announcement, first reported by POLITICO, comes as Biden is set to give a speech Friday touting his health care agenda, which will include efforts to crack down on junk fees and other actions aimed at lowering health care costs.

What’s in the rule: If finalized, short-term health plans would last for three months and can only be renewed for one more month.

The Trump-era rule enabled these types of plans to last up to a year and be renewed for up to three years. A 2016 rule under the Obama presidency limited the short-term plans to three months.

Short-term plans do not have to meet the same requirements as a health insurance plan sold on the Obamacare insurance exchanges. These requirements can include coverage of pre-existing conditions and certain essential health benefits such as prescription drugs.

Consumers currently enrolled in short-term plans will be grandfathered in under the old rules, according to a senior administration official granted anonymity to discuss the details of the Biden plan.

The rule does not limit the sale of short-term plans during Obamacare’s open enrollment as some Democratic lawmakers had hoped.

When asked Thursday why it has taken several years to take this step, a senior administration official responded that “we have been busy on health care. We have driven record high enrollment in ACA coverage.”

What else did they announce? The administration also rolled out guidance intended to close a loophole in the No Surprises Act, which Congress passed in 2020 to keep patients from receiving surprise bills when they are treated by out-of-network providers.

HHS officials are concerned that health insurers rely on certain loopholes such as contracting with a hospital but claiming it isn’t technically in the network, according to a White House fact sheet.

The guidance said that the move is “not allowed under federal law: health care services provided by these providers are either out-of-network and subject to the surprise billing protections, or they are in-network,” the fact sheet said.

Administration officials also are concerned about consumers getting charged “facility fees” for work done outside of a hospital such as in an affiliated doctor’s office. A plan and hospital has to make consumers aware of these fees.

Several agencies also want to learn more about the impact of third-party medical credit cards. HHS, Treasury and the Consumer Financial Protection Bureau want information on the use of such cards that feature extremely high interest rates, according to the senior administration officials on Thursday’s call with reporters.

The administration released new research on Friday outlining the impact of the Inflation Reduction Act’s cap on Part D out-of-pocket spending. The report forecasts that the change could reduce out-of-pocket spending by nearly $400 for nearly 19 million Part D enrollees.

“Among this population, the report finds nearly 1.9 million enrollees are projected to save at least $1,000 in 2025,” a release on the report said.