Biden administration to crack down on ‘junk’ health insurance plans, surprise billing

WASHINGTON — The Biden administration announced new initiatives Friday that could reduce health care costs, though none will take effect immediately.

The changes include a proposed rule that would reduce the amount of time short-term health insurance plans can last and require companies that offer the plans to be more transparent about what is covered and what isn’t.

The administration is providing guidance to hospitals that patients are either in-network, with the costs for their health care falling under billing limitations in the Affordable Care Act, or it is out-of-network care and billing costs are covered by a federal law known as the No Surprises Act. 

The White House is also requesting information about credit cards with especially high interest rates that can be offered within doctors’ offices to help people pay for their health care.

White House Domestic Policy Advisor Neera Tanden said during a call with reporters on Thursday the proposed rule, which could be finalized later this year, would help Americans to understand the difference between health insurance plans offered under the Affordable Care Act and so-called “junk insurance.”

Those short-term health insurance plans, Tanden said, “are intended to provide temporary coverage as people transition from one source of coverage to another, like when we’re between jobs.”

During the Trump administration, those short-term plans, which don’t have to provide the same type of health care coverage as other insurance plans, were allowed to last as long as three years, she said.

“The ACA has helped tens of millions of Americans access high-quality, affordable health insurance that protects Americans from being discriminated against because of pre-existing conditions,” Tanden said. “Unfortunately, some types of insurance plans, like short-term limited duration insurance, don’t provide comprehensive coverage. Importantly, they don’t have to comply with the critical ACA protections.”

The short-term plans have left some people with thousands of dollars in medical debt, including a man in Montana who had $43,000 in medical bills after the short-term plan denied cancer coverage by claiming it was a pre-existing condition, she said.

In addition to limiting those short-term health insurance plans to three months with a one-month renewal option, the proposed rule would “require plans that discriminate based on pre-existing conditions and don’t offer comprehensive benefits to disclose their limits clearly to consumers,” Tanden said.

Wisconsin Democratic Sen. Tammy Baldwin celebrated the move in a written statement, saying the short-term insurance plans often show up with a lower price than other plans, though that comes with pitfalls.

“The lower sticker price misleads Americans into buying health insurance that does not have to cover pre-existing conditions, prescription drugs, maternity care, and a host of other basic needs, all while sticking patients with a huge bill to pay out of pocket when they do need health care,” Baldwin said.

Unexpected medical bills

On surprise medical billing, the Department of Health and Human Services is sending guidance to hospitals that Biden administration officials hope will reduce or eliminate people receiving thousands in medical bills they did not expect.

“Under this new guidance, we’re making it clear that plans and providers cannot evade surprise billing rules simply by changing the terms they use in their contracts,” Tanden said.

“For example, some health plans contract with hospitals, then try to claim that they are not technically ‘in network,’” she added. “Frankly, what they are doing is gaming the system. This is not allowed and, as our guidance will describe, it must end.”

A senior administration official, speaking on background to describe details of the guidance, said it should clarify that there is no space between the protections for out-of-network costs covered under the federal law known as the No Surprises Act, or protections in the Affordable Care Act for in-network costs.

“We are saying there is no gray area here,” the official said. “It is either the protections of the No Surprises Act, or the protections for out-of-pocket costs.”

The third initiative from the administration unveiled Friday requests information from the public about credit cards and certain types of loans that are often offered to people to help them pay for health care.

Tanden said people signing up for that type of medical credit card may not understand how they work because they “often include teaser rates and deferred interest features that lead to higher costs for consumers.”

A second senior administration official, also speaking on background to discuss details of the plan, said those credit cards often come with interest rates that are much higher than a regular credit card. They are sometimes offered to patients in a health care provider’s office.

“So people are signing up for these things at the same time that they’re deciding on their medical care — those are certainly not going to be optimal conditions for anybody to be making financial decisions,” the official said, noting that many of the cards have “surprise tricks and straps built into them.”

Virginia Democratic Rep. Bobby Scott, ranking member on the Committee on Education and the Workforce, cheered the moves in a written statement.

“With today’s announcement, President Biden is delivering on his promise to promote access to affordable health care and lower families’ everyday costs,” Scott said. “In Congress, Democrats will continue to advance proposals that build on our progress and fiercely defend the ACA from Republican politicians’ persistent attacks.”