President Biden to Reverse Trump’s Expansion of “Junk” Health Insurance

President Joe Biden is taking action to address what the White House considers “junk” health insurance plans, specifically short-term coverage options expanded by the Trump administration as an alternative to Obamacare plans. On Friday, July 7, Biden will announce a draft regulation that aims to limit temporary plans to four months instead of the current three-year maximum. Additionally, the regulation will require greater transparency regarding coverage limits.

The move reflects Biden’s commitment to strengthening the Affordable Care Act (ACA) and protecting consumers from substandard coverage. The Trump administration’s policies enabled the sale of short-term health insurance plans that offered limited benefits and often excluded coverage for pre-existing conditions. While these plans attracted healthier individuals seeking lower-cost options, critics argued that they left consumers vulnerable to significant medical expenses.

The Biden administration believes that these plans can be misleading, leaving individuals feeling scammed when faced with unexpectedly high bills. The new regulation seeks to make these plans fairer and ensure that consumers understand the coverage they are signing up for, according to Neera Tanden, White House domestic policy advisor.

In addition to targeting “junk” health insurance plans, Biden is expected to unveil measures aimed at curbing healthcare providers’ ability to circumvent a recent law protecting consumers from surprise medical bills. The administration is also examining the growing use of medical credit cards, expressing concerns about their high costs and consumers’ limited understanding of the associated terms.

By addressing these issues, the White House aims to tackle various forms of “junk fees” and lower healthcare costs. The proposed regulation aligns with Biden’s promise to reverse the Trump administration’s expansion of short-term health insurance plans that fail to meet ACA requirements, such as covering pre-existing conditions. While the Obama administration had limited the sale of short-term plans to 90-day periods, the Trump administration extended the maximum duration to three years as part of its efforts to overhaul the ACA.

The Biden administration argues that these plans often leave families facing unexpected financial burdens when their healthcare needs are not adequately covered. In 2019, the Congressional Budget Office estimated that blocking Trump’s expansion would have resulted in 1.5 million fewer people purchasing short-term plans annually. Some would have opted for comprehensive Obamacare plans, while others would have remained uninsured.

Biden’s proposed regulation is among the final steps in his plan to strengthen the ACA. The administration is determined to ensure that patients are protected from exorbitant bills when providers are not part of their insurer’s network. The guidance issued will emphasize the need to adhere to the rules and prevent attempts to evade them by exploiting contractual terms.

The administration is also examining the increased use of third-party medical credit cards and loans to pay for care. These products often come with hidden costs and deferred interest features that can lead to excessive debt. The Consumer Financial Protection Bureau, Treasury Department, and Department of Health and Human Services will conduct a joint review to assess the sale and collection practices associated with these financial products.

Alongside these actions, President Biden is highlighting the savings seniors can expect from the Inflation Reduction Act implemented last year. Beginning in 2025, out-of-pocket costs for Medicare’s prescription drug plan will be capped at $2,000 per year. This change is estimated to save nearly 19 million seniors and other Medicare beneficiaries an average of $400 annually, with those facing the highest drug costs saving an average of $2,500 each year.

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