Infectious Disease
Biden administration proposes rules to protect consumers from health ‘junk insurance’
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Healio could not confirm relevant financial disclosures at the time of publication.
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Key takeaways:
- Prior rules allowed short-term insurance products to be extended to a maximum of 3 years.
- Guidance was also issued to help protect consumers from surprise medical bills, which can range from $700 to $2,600.
President Joe Biden announced new proposals that aim to lower health care costs by reinstating limits on short-term insurance plans and addressing surprise medical bills and medical debt.
According to a White House press release, the proposed rule would close loopholes that allowed companies to offer misleading short-term health insurance products. The products — referred to by the Biden administration as “junk insurance” — could discriminate against consumers based on pre-existing conditions by claiming they are not covered, leaving consumers with little to no coverage and thousands of dollars in medical bills.
Prior rules allowed short-term insurance products to be extended to a maximum of 3 years. Image: Adobe Stock.
Previous regulations adopted in 2018 by the Trump administration allowed limited-duration health insurance plans to be extended to 3 years, according to the release.
If the new rules are finalized, insurance plans that claim to be short term would be limited to just 3 months, or a maximum of 4 months, if extended.
“These actions will reduce scam insurance plans that offer really no insurance at all,” the release said.
Health insurers that want to be exempt from the rules — “because they are designed to replace lost income when people get sick, rather than provide full medical coverage” — would have to make it clear that consumers would get a “defined benefit” instead of comprehensive insurance, according to the release.
ACP President Omar T. Atiq, MD, FACP, said in a statement that the organization had previously opposed the relaxed rules because the plans were meant to be “temporary stopgaps.”
“More needs to be done to ensure that all Americans are able to access affordable health care and health insurance; however short-term plans that leave enrollees with inadequate coverage were never the way to achieve this goal,” Atiq said. “ACP will continue to advocate with the administration, Congress and policymakers to make health care affordable and accessible for all Americans.”
In addition to proposing rules on short-term insurance, the Biden administration also issued guidance to help prevent consumers from surprise medical bills — which can range from $750 to $2,600 — clarifying that:
- health care services are either out of network and subject to the surprise billing protections or in network and subject to the Affordable Care Act’s annual limitation on cost-sharing;
- health plans and providers must be transparent about “facility fee” charges for services that are provided outside of hospitals, in addition to costs of other products or services they cover or provide; other
- non-participating providers and EDs cannot escape protections from the No Surprises Act by renaming facility fee charges.
Additionally, the HHS, Consumer Financial Protection Bureau and the US Department of the Treasury issued a Request for Information to understand the emerging practice of providers signing patients up for third-party medical credit cards and loans. Such credit cards can possess teaser rates and deferred interest features that increase costs for consumers and are offered even when low-to-no-cost assistance or coverage options are available.
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