WASHINGTON (NEXSTAR) –- Soon there will be new restrictions on how long you can have a short-term health insurance plan.
The Biden administration just finalized a rule that will cap short-term health insurance plans to three months, with the option for a one-month renewal.
The new rule reverses a Trump era policy that allowed people to have the short-term plans for three years, with a one-year renewal option.
“The last administration took that provision which is very narrow for limited emergency coverage and made the loophole so big you could drive a truck through it,” Dodenberg said.
Jon Dodenberg, with the White House National Economic Council, says the move is meant to protect consumers by cracking down on what he calls ‘junk’ health insurance. He argues short-term plans often mislead people into thinking they have comprehensive coverage, when they don’t.
“That is a scam. They’re being told you can pay this incredibly low price and get good insurance, but it turns out it’s not good insurance. In fact, it’s not really insurance at all,” Dodenberg said.
But critics say the Biden administration is taking away consumer choices in a way that could do real damage.
CATO Institute Health Policy Expert Michael Cannon says it will create gaps in health insurance, because people who get sick on short term insurance will have no options if they hit their four-month limit outside of the Affordable Care enrollment period.
“The Biden administration is throwing sick people out of their health insurance and leaving them uninsured for up to 12 months,” Cannon said.
Plus, he argues most short-term plans do provide comprehensive coverage and says labeling them junk is wrong.
“It’s not only garbage, it’s dishonest. Because they are the ones hoodwinking consumers here,” Cannon said. “They’re trying to sell Obamacare and they will call anything that is not Obamacare junk.”
But the White House insists the change will improve healthcare.
“What we want to do is make sure that everybody has affordable care, they have the coverage that they need, and if they get sick that they can get the coverage that they need without getting bankrupted,” Dodenberg said.
The new rule is set to take effect in September.
