President Joe Biden convened a meeting of his Competition Council on March 5 to discuss making healthcare more affordable. During the meeting, he announced a new rule targeting short-term insurance plans. The Biden administration introduced a new rule on Thursday to crack down on what they refer to as “junk” health insurance. These plans offer inexpensive coverage but often provide minimal services, leaving customers with high medical bills.
The administration described these plans as a scam that lured individuals into paying monthly premiums but failed to offer adequate coverage when needed. The new rule aims to limit short-term insurance plans to a maximum of seven months, down from the previous allowance of up to three years. Plans will be required to clearly outline the coverage provided and any limitations.
Short-term insurance plans became more prevalent following a 2018 rule change under the Trump administration. Unlike plans under the Affordable Care Act, these short-term plans do not have to adhere to the same consumer protection standards. The White House argued that allowing insurance companies to offer these plans without adequate regulations could lead to loopholes that circumvent important protections, such as coverage for pre-existing conditions.
Supporters of the Affordable Care Act are concerned that short-term plans may draw in younger, healthier individuals away from ACA plans. This could impact the funding and sustainability of the ACA on a national level. President Biden’s administration is taking steps to address these concerns and ensure that individuals have access to quality healthcare coverage without falling victim to subpar insurance plans.