Biden Administration Finalizes Rule Curbing Use of Short-Term Health Plans


The Biden administration announced on Thursday that it had finalized a new regulation that curbs the use of short-term health insurance plans that do not comply with the Affordable Care Act, reversing a move by the Trump administration to give consumers more access to cheaper but skimpier plans.

Under the new rule, the short-term plans will be able to last for only 90 days, with an option for consumers to make a one-month extension.

In 2018, the Trump administration issued a rule allowing the plans to last for just under a year, with the option of renewing them for a total duration of up to three years. Previously, under an Obama-era policy, the plans could last no longer than three months.

The plans, often with lower premiums than those found on the Affordable Care Act’s marketplaces, do not have to cover people with pre-existing conditions. They are also free from the health law’s requirement that plans offer a minimum set of benefits, like prescription drug coverage and maternity care.

Democrats deride the so-called short-term, limited-duration plans as “junk” insurance, and the Obama-era policy was meant to ensure that healthy consumers could not use that option to sidestep the Affordable Care Act’s marketplaces, leaving a sicker pool of customers enrolling in the comprehensive plans offered under the health law.

The White House cast the new rule as a way to fortify the marketplaces. In a briefing with reporters on Wednesday, Neera Tanden, President Biden’s domestic policy adviser, said that 45 million Americans were now covered through the marketplaces or the expansion of Medicaid under the Affordable Care Act. More than 20 million people signed up for plans on the marketplaces during the most recent open enrollment period.

“President Biden is not taking his foot off the gas,” Ms. Tanden said.

Supporters of the short-term plans have said that the less expensive options are well-suited to workers moving between jobs or those unable to afford a marketplace plan. Alex M. Azar II, who served as secretary of health and human services under President Donald J. Trump, said in 2018 that the plans “can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”

But critics of the plans have warned that insurers can mislead consumers who enroll in them, including people who might be eligible for free coverage through the Affordable Care Act’s marketplaces. After the Trump administration issued its rule in 2018, some states moved on their own to limit the sale of the plans. Democratic lawmakers urged the Biden administration to reverse the regulation, and the administration issued a proposed rule to do so last summer.

In its announcement on Thursday, the White House cited a man in Montana who had accumulated over $40,000 in health costs because his cancer was considered a pre-existing condition, and a woman in Pennsylvania who had undergone an amputation and received roughly $20,000 in bills that her plan would not cover.

The new regulation also requires insurers to provide a disclaimer explaining what the short-term plans cover.

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