Biden limits Trump era “junk” short-term health insurance plans

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The goal is to reduce the sale and use of the plans that can leave policyholders footing huge bills.

The Biden administration is working on rolling back the short-term health insurance plans that rolled out during the Trump administration.  The purpose is to shrink the use of these “junk” plans that leave patients at risk of paying large medical bills out of their own pockets.

The new rule was first proposed in the summer of 2023

This new strategy is a part of a broader effort to reduce the cost of medical care. Part of this involves limits to the duration of new short-term health insurance plans to three months, with a renewal option extending only to a four month maximum, said the Biden administration at the end of last week. 

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The new rule also requires that these plans provide clear benefits explanations to consumers.  The reason is that they typically provide less coverage than policies sold through the Affordable Care Act (ACA). Consumers must now be informed of how they can obtain more comprehensive medical coverage.

Limiting short-term health insurance plans is only one of many steps

This particular move is only one of several President Joe Biden’s administration is making in stark contrast with changes made by former President Donald Trump, the current presumptive Republican presidential nominee.

During his time in office, Trump extended the allowed duration of the short-term health insurance plans, as a part of his overall strategy to weaken the ACA.

Seeking to inform consumers

“These junk insurance plans misled consumers into thinking they are buying real health insurance,” said White House domestic policy advisor Neera Tanden.  She added that when people actually required medical care, they would discover that their coverage included benefits caps, that they were limited by preexisting conditions, or that what they required simply was not covered.

“Right when you need insurance the most, you’re stuck footing a giant bill. That’s not real insurance, that’s a scam,” added Tanden, who underscored that the changes Trump made in this area “really hurt consumers”.

Putting things in reverse

The new rule the Biden administration is putting into place mainly reverses the short-term health insurance plans changes made in 2018 by the former administration.

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