Washington, D.C. — Today, the Biden administration issued a final rule to protect consumers and limit short-term junk plans. When Donald Trump was in office, he let insurance companies sell short-term junk plans, which can deny coverage for people with pre-existing conditions and can refuse to cover basic benefits guaranteed under the Affordable Care Act (ACA) like hospitalization and prescription drugs. This move by President Biden will protect consumers from junk insurance that often uses deceptive marketing practices and leaves American families with staggering medical bills. The President’s action is in stark contrast to the MAGA Republican efforts to enshrine junk plans into law.
In response, Protect Our Care Chair Leslie Dach issued the following statement:
“President Biden is reversing the deliberate efforts by Donald Trump and MAGA Republicans to gut protections for pre-existing protections and give insurance companies the right to deny coverage for basic benefits like prescription drugs and maternity care. The contrast between President Biden’s health care agenda and MAGA Republicans’ could not be clearer. Republicans continue to push these junk plans in their newest budget proposal, aiming to make these junk plans widely available. President Biden is on the side of the American people as he aims to make sure families aren’t scammed into substandard coverage that can deny lifesaving care.”
Background
President Biden And Democrats Delivered Lower Health Care Costs And Now A Record Number Of Americans Were Able To Purchase Quality and Affordable Health Care Through the ACA. A record-breaking 21.4 million Americans signed up for coverage with 80 percent of people able to find coverage through the Marketplace for $10 or less per month. The ACA has generated record savings and improved access to care and financial security for families.
The Latest GOP Budget Expands Junk Plans. The latest budget proposal from the Republican Study Committee would codify rules put forth by the Trump administration that expanded health insurance plans known as association health plans (AHPs). These plans are not required to cover the essential health benefits put in place by the Affordable Care Act and are allowed to charge people more based on their age, health status, and gender. AHPs have a long history of fraud and unpaid claims and provide weaker cost and protection coverage. The proposal also applauds efforts by the Trump administration to expand short-term limited-duration plans, which engage in predatory marketing practices, fail to protect people with pre-existing conditions, and put patients at risk of bankruptcy when they get sick. The Trump administration’s decision to expand access to these plans exposed consumers to scams and reduced transparency about coverage limits and hidden fees.
The Trump Administration Cut Critical ACA Health Subsidies & Expanded Short-Term, Limited Duration Insurance (STLDI) Plans That Did Not Meet ACA Requirements. In late 2017, after Congressional Republicans’ efforts to repeal and replace the Affordable Care Act (ACA) failed to advance, then-President Trump ordered sweeping changes to health insurance policy with a pair of executive actions. He first announced that the sale of certain cheap policies with few benefits or protections – known as short-term, limited-duration insurance (STLDI) – would be allowed to be sold for up to 364 days with renewals for up to three years instead of three months, then announced cuts to critical health subsidies helping pay out-of-pocket costs for low-income people in America. In response, many patient and physicians groups raised concerns that junk plans would “cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options,” and “draw younger and healthier people away from the exchanges and drive additional plans out of the market.” The changes were solidified in August 2018 as a final rule allowing STLDI plans to be considered a form of individual health insurance coverage that would meet the ACA’s individual mandate.
Junk Plans Enabled By The Trump Administration Have Left Patients Without Protections For Pre-Existing Conditions Afforded By the ACA. “Because they tend to look less expensive up front, short-term plans continue to find buyers, and they have been championed by the Trump administration (which has loosened restrictions on them) as an alternative for consumers. […] Consumer advocates have long sounded alarm bells about short-term plans and others that don’t comply with the Affordable Care Act rules — rules that require plans to provide comprehensive benefits to all comers, regardless of their health. The ACA also prohibits annual or lifetime dollar limits on coverage for any plan sold on the federal or state health insurance exchanges.” [NPR, 12/3/20]
Patient Advocacy Groups, Health Policy Experts, and Insurance Insiders Alike Have Warned Against Junk Plans’ Lack of Transparency and Coverage. Patient advocacy groups and health policy experts have long warned about the fraud risks that come with STLDI and other non-ACA-compliant plans. In January 2019, the Georgetown University Health Policy Institute found that consumers searching online for ACA-compliant plans were often directed, instead, to “junk plans.” Another study sponsored by the Leukemia and Lymphoma Society found that junk plans often rely on misleading marketing, are often misunderstood by consumers who purchase them with no right to appeal plan decisions, drive up patients’ out-of-pocket costs, and “threaten prices across the insurance market.” In March 2021, 30 patient organizations published a report pushing for greater regulation of dozens of different types of “junk insurance,” including STLDI plans. Even health insurance industry insiders have warned that the “very profitable” plans are inadequate, and state insurance regulators have expressed concerns that STLDI plan administrators have been misleading and taking advantage of consumers while offering substandard coverage.