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Health insurers will only be able offer short-term health insurance plans for a few months—not years—under the Biden administration’s latest push to rein in healthcare costs.
The White House on Thursday unveiled new federal rules to ensure short-term plans are “truly short-term.” The move comes several months after the Biden administration first proposed regulations targeting short-term, limited-duration insurance (STLDI) policies, which critics say let insurers provide little or no coverage, discriminate against preexisting conditions, and contribute to unexpected medical expenses.
Specifically, the Departments of Health and Human Services, Labor, and Treasury’s final rules will restrict STLDI policies to three months, with renewal up to four months—instead of the previous three-year maximum. Plans must also clearly explain benefit limits to policyholders, including what services are covered.
The changes, which finalize amendments announced in July 2023, will affect STLDI policies sold or issued after September 1.
White House officials said the new rules will ensure patients aren’t “scammed into low-quality coverage that leaves consumers on the hook for thousands of dollars in medical bills or denies life-saving care right before treatment.”
Further, they argued, the regulations build “on the promise of the Affordable Care Act (ACA),” which prohibits most health insurance plans from denying coverage for preexisting conditions and setting lifetime and annual limits. STLDI policies were excluded from those ACA rules and some reporting requirements.
But Senator Bill Cassidy, a Louisiana Republican and ranking member of the Health, Education, Labor, and Pensions Committee, said the rule “is what people hated most about Obamacare, taking away their choices and forcing Americans into a one-size-fits-all approach.”
“In this case, the requirement will be to go from something cheaper to something more expensive. Americans want affordability,” he said in a statement.