Campaigning for the presidency in 2019, Joe Biden assured voters he would not eliminate private health insurance plans.
Biden even told an audience in Iowa, “If you have private insurance, you can keep it”—a risky echo of President Barack Obama’s 2013 “Lie of the Year.”
But over the Independence Day weekend, the Biden administration announced a new rule that would severely restrict Americans from purchasing short-term, limited-duration insurance plans. This rule would basically eliminate the health insurance plans of more than 1.5 million Americans.
Reverses Trump Reforms
In 2018, the Trump administration issued a rule that made it significantly easier for Americans to purchase such short-term plans, which had been limited to three months, for as long as 12 months, and to renew them for up to 36 months.
It is also important to note the Trump rule required issuers of short-term, limited-duration insurance to “display prominently in consumer materials one of two versions of a consumer notice explaining the policy that they are purchasing.”
At the time, Health and Human Services Secretary Alex Azar said the goal was to bring “more affordable insurance options back to the market, including through allowing the renewal of short-term plans. These plans aren’t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.”
Trump’s Centers for Medicare and Medicaid Services Administrator Seema Verma said the “rule opens the door to new, more affordable coverage options for millions of middle-class Americans who have been priced out of ACA (Affordable Care Act) plans.”
Lifelines, not ‘Junk Plans’
For many Americans, short-term plans have been an excellent choice, with premiums and deductibles extremely affordable compared to their ACA counterparts. For those between jobs, in school, or unable to enroll in employer-provided insurance, the plans have been a health insurance lifeline.
Short-term insurance plans have their drawbacks. If you have pre-existing health conditions, they do not have to cover you. But unlike plans available under the ACA (aka Obamacare) they offer consumers extensive flexibility and catastrophic coverage at a low price.
Yet, despite the fact more than 1.5 million Americans have chosen to enroll in these short-term plans, the Biden administration is determined to eliminate this popular health insurance option.
According to the Biden administration and Democrats in Congress, short-term plans are “junk plans” because, unlike ACA plans, they do not offer comprehensive coverage options. But that is the entire point of these plans. They are intended as a stop-gap health insurance option for people between jobs or who do not need or want comprehensive coverage or cannot pay the attendant costs of such coverage.
Under the current rule, there is a wide range of short-term options, with some beginning as low as $55 per month for individuals. On the other hand, the least expensive Obamacare option, the Bronze plan, costs several times that, on average. Obamacare insurance can run more than $1,000 per month for a 40-year-old couple with one child. And, even at that price, these plans can carry family deductibles greater than $18,000 per year.
Overriding the States
Biden’s rule is an affront to federalism. As of this writing, 38 states offer short-term plans, with a range of renewal limits. Some states, such as California and New York, do not offer them at all. This, in the words of Supreme Court Justice Louis Brandeis, is a feature of “the laboratories of democracy” at work.
But under Biden’s plan, no state would be allowed to offer such plans at all. This will further centralize power in Washington and empower D.C. bureaucrats.
As House Ways and Means Chairman Jason Smith (R-MO) said of Biden’s new rule, “The American people, not Washington bureaucrats, should be the ones deciding what health care coverage is the best for themselves and their families.”
The good news is that Biden’s rule is not permanent; it can be changed by the next administration. But that rings hollow for the 1.5 million Americans who are about to be kicked off of their private insurance, despite Biden’s pledge he would never do such a thing.
Chris Talgo (ctalgo@heartland.org) is the editorial director at The Heartland Institute. A version of this article appeared in The Hill on July 23, 3023. Reprinted with permission.
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