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Biden administration finalizes rule limiting use of short-term health plans

The Biden administration announced Thursday that it has finalized new regulations that limit the use of short-term health insurance plans that do not comply with the Affordable Care Act, reversing a Trump administration decision to to give consumers better access to cheaper but narrower products. plans.

Under the new rule, short-term plans can only last 90 days, with an option to extend for another month.

In 2018, the Trump administration issued a rule allowing plans to last just under a year, with the option to renew them for a total duration of up to three years. Previously, under Obama-era policy, plans had to last less than three months.

The plans, often with lower premiums than those found in the Affordable Care Act marketplaces, are not required to cover people with preexisting conditions. They are also exempt from the health law’s requirement that plans provide a minimum package of benefits, such as prescription drug coverage and maternity care.

Democrats deride so-called short-term, limited-duration plans as “junk” insurance, and Obama-era policy was intended to ensure healthy consumers couldn’t use the option to circumvent the Affordable Care Act markets, leaving a sicker pool. customers adhering to the comprehensive plans offered by the health law.

The White House adopted this new rule as a way to strengthen markets. In a briefing with reporters Wednesday, Neera Tanden, President Biden’s domestic policy adviser, said 45 million Americans are now covered by the marketplaces or through Medicaid expansion under the Affordable Care Act. More than 20 million people signed up for plans on marketplaces during the last open enrollment period.

“President Biden is not letting up,” Ms. Tanden said.

Supporters of short-term plans said the less expensive options work well for people who can’t afford a marketplace plan. Brian Blase, who worked on the 2018 rule as a White House official under President Donald J. Trump, said the plans were also ideal for contract and independent workers, including those whose incomes are too high. high to be entitled to more generous subsidies on Affordable. Care Act markets.

Mr. Blase said the new rule could cause insurers offering marketplace plans to face less competition. Sick consumers who purchase a three-month plan could also lose coverage without an immediate better option, he added.

“No one benefits from it,” he said.

But critics of short-term plans have warned that insurers can mislead consumers who sign up for them, including people who might be eligible for free coverage through the Affordable Care Act marketplaces. The new regulation requires insurers to provide a disclaimer explaining what short-term plans cover.

In its announcement Thursday, the White House cited a Montana man who racked up more than $40,000 in health care costs because his cancer was considered a pre-existing condition, and a Pennsylvania woman who underwent an amputation and received about $20,000 in bills that his plan pre-existed. would not cover.

Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, said the plans often appear prominently when consumers search for health insurance online, with misleading ads.

“Often the marketing materials say they cover hospitalizations and prescription medications,” she said. “To the average consumer, this looks like a real health insurance plan.”

Georgetown researchers conducted a so-called secret shopper study last year, calling 20 sales representatives to ask them about the health plans of people who had lost Medicaid coverage and were eligible for free market plans. They found that none of the representatives mentioned the availability of free plans. Brokers often used aggressive and deceptive tactics to sell short-term plans without providing written information about the plans, the researchers found.

Ms. Corlette said brokers generally received higher commissions for selling short-term plans than for more comprehensive options.

As a consumer, she said, “you have to be very savvy and careful.”

After the Trump administration issued its rule in 2018, some states took steps to limit the sale of short-term plans. Democratic lawmakers have urged the Biden administration to roll back the regulations, and the administration released a proposed rule to do so last summer.

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