Biden Cracks Down on ‘Junk’ Health Insurance Plans That ‘Exploit’ Americans

The Biden administration announced a new set of initiatives on Friday aimed at reducing health care costs for Americans by cracking down on what the president has called “junk” health insurance plans.

These short-term plans—which were expanded by the Trump administration in 2018—have been marketed as a more affordable alternative to Affordable Care Act plans. But in reality, short-term plans offer extremely limited coverage, can discriminate and deny coverage based on pre-existing conditions, and trick consumers into buying products that provide “little or no coverage when they need it most,” according to the White House. 

In many cases, people who purchase these plans have been left with mountains of debt after discovering their plans would not cover urgently-needed medical procedures. 

The newly proposed rules aim to close loopholes that allow companies to offer what the White House described as “misleading insurance products,” and limit the length of these plans to three months, with a potential one-month extension. Currently, these plans can provide coverage for nearly a year, and can be extended for a total of up to 36 months. 

Under Biden’s new proposal, plans would also be required to provide customers with a clear explanation of benefits.

“My administration is issuing a new rule that would close the loophole that allows these junk insurance plans to exploit Americans,” President Biden said in a speech on Friday. “Under our rule, ‘short-term’ plans would have to be short-term. That means four months or less, not three years.”

He also criticized the providers of these plans for taking advantage of consumers with misleading promises and plans that offer almost no real coverage. 

“In America, it sounds corny, but fairness is something we kind of expect,” Biden said. “And I don’t know anybody who likes to be viewed as having been played for a sucker.”

The president also announced new guidance on “surprise medical billing” stemming from 2020’s No Surprises Act, which Congress passed to prevent patients from receiving surprise bills when they were treated by out-of-network care providers at in-network facilities.

The guidance would make it clear that federal law bars insurers and hospitals from entering into contracts with each other but then using loopholes to claim providers are not technically “in-network.” 

Services provided by these vendors will either be labeled “out-of-network” and subject to existing surprise billing protections, or “out-of-network” and subject to Obamacare’s annual limits on out-of-pocket payments. Health plans would also need to disclose additional facility fees, according to the Biden administration. 

In another effort to crack down on potentially predatory behavior, the Consumer Financial Protection Bureau, the Department of Health and Human Services, and the Treasury will also be collaborating to determine whether health care providers encouraging consumers to sign up for medical credit cards and loans are breaking the law by operating outside of consumer protections.

Friday’s announcement marked just the latest example of the Biden administration’s focus on reigning in junk fees and saving families money. 

In June, the administration proposed a new regulation that would require cable companies and satellite providers to show the full price of their services “upfront”—meaning hidden fees would no longer be snuck in at checkout. A week prior, Ticketmaster, SeatGeek, and other major ticketing companies announced that they agreed to institute “all-in” pricing, which would also mean that consumers will no longer be surprised by additional fees at checkout.

Broadly, Biden and his administration have also worked to increase transparency between companies and consumers since taking office.

The Federal Communications Commission proposed a rule last November to require internet companies to publish prices, data allowances, and other important information on “easy-to-understand labels” for consumers as they compare services. That rule has yet to go into effect.

Earlier this year, the Federal Trade Commission (FTC) proposed a rule to ban non-compete clauses in employment contracts. Employers often force their workers to sign these clauses, which effectively bar them from starting their own business or finding a new job in the same field within a certain area or timeframe after leaving their current job.

Most recently, the FTC announced that it was suing Amazon, alleging that the company tricked millions of people into signing up for Prime service through “deceptive user interface designs.” The complaint also alleges that Amazon tried to keep users subscribed—even when they wanted to cancel their memberships—by making it exceedingly difficult to unsubscribe.