Republicans Promoting Junk Plans are Putting Big Insurance Company Profits Before Patients Once Again
This month, President Biden announced plans to rein in junk plans like short-term, limited-duration insurance (STLDI) plans that were previously expanded and promoted by the Trump administration. The fact of the matter is simple: junk plans engage in predatory marketing practices, fail to protect people with pre-existing conditions, and put patients at risk of bankruptcy when they get sick.
In 2018, the Trump administration changed the rules to allow these plans to be sold like regular insurance and gutted funding for advertising Affordable Care Act (ACA) marketplace plans — to disastrous effect. Far from promoting “consumer protection” and “consumer choice,” the Trump administration exposed consumers to scams and reduced transparency about coverage limits and hidden fees. These plans are particularly harmful for communities of color and other marginalized groups who are more likely to have poorer health and to be living in poverty.
While some conservative voices claim that ending these rules could leave some uninsured, the Biden administration and Democrats in Congress have expanded access to no- or low-cost ACA coverage and funded outreach and enrollment so people are more likely to enroll in coverage that protects pre-existing conditions and less likely to get ripped off. Nearly 16.4 million people are enrolled in Marketplace coverage, including plans costing as little as $0 and $10/month. As the Biden administration works to lower health care costs and regulate these junk plans, Congressional Republicans are passing legislation to weaken protections for millions of people with pre-existing conditions and boost health insurance plans that aren’t required to cover prescription drugs or hospital care.
The Trump Administration Expanded Junk Plans and Gutted Funding For Advertising ACA Plans, Putting Consumers At Risk
The Trump Administration Cut Critical ACA Health Subsidies & Enabled Greater Access To Short-Term, Limited Duration Insurance (STLDI) Plans That Did Not Meet ACA Requirements. In late 2017, after Congressional Republicans’ efforts to repeal and replace the Affordable Care Act (ACA) failed to advance, then-President Trump ordered sweeping changes to health insurance with a pair of executive actions. He first announced that the sale of certain cheap policies with few benefits or protections – known as short-term, limited-duration insurance (STLDI) – would be allowed to be sold for up to 364 days with renewals for up to three years instead of three months, then announced cuts to critical health subsidies helping pay out-of-pocket costs for low-income people in America. In response, many patient and physicians groups raised concerns that junk plans would “cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options,” and “draw younger and healthier people away from the exchanges and drive additional plans out of the market.” The changes were solidified in August 2018 as a final rule allowing STLDI plans to be considered a form of individual health insurance coverage that would meet the ACA’s individual mandate.
Junk Plans Enabled By The Trump Administration Have Left Patients Without Protections For Pre-existing Conditions Afforded By the ACA. “Because they tend to look less expensive up front, short-term plans continue to find buyers, and they have been championed by the Trump administration (which has loosened restrictions on them) as an alternative for consumers. […] Consumer advocates have long sounded alarm bells about short-term plans and others that don’t comply with the Affordable Care Act rules — rules that require plans to provide comprehensive benefits to all comers, regardless of their health. The ACA also prohibits annual or lifetime dollar limits on coverage for any plan sold on the federal or state health insurance exchanges.” [NPR, 12/3/20]
Patient Advocacy Groups, Health Policy Experts, and Insurance Insiders Alike Have Warned Against Junk Plans’ Lack of Transparency and Coverage. Patient advocacy groups and health policy experts have long warned about the fraud risks that come with STLDI and other non-ACA-compliant plans. In January 2019, the Georgetown University Health Policy Institute found that consumers searching online for ACA-compliant plans were often directed, instead, to “junk plans.” Another study sponsored by the Leukemia and Lymphoma Society found that junk plans often rely on misleading marketing, are often misunderstood by consumers who purchase them with no right to appeal plan decisions, drive up patients’ out-of-pocket costs, and “threaten prices across the insurance market.” In March 2021, 30 patient organizations published a report pushing for greater regulation of dozens of different types of “junk insurance,” including STLDI plans. Even health insurance industry insiders have warned that the “very profitable” plans are inadequate, and state insurance regulators have expressed concerns that STLDI plan administrators have been misleading and taking advantage of consumers while offering substandard coverage.
Ever Since The Trump Administration’s Rule Change, Junk Plans Have Attracted Fraud. Following the Trump administration’s rule change, health insurance companies across the country began offering STLDI plans to consumers. Shortly after the rule took effect, federal officials shut down numerous “ruinous” health insurance plans that falsely claimed to provide comprehensive health insurance, with one commissioner describing them as a “classic bait-and-switch scheme designed to trick consumers.”
- 2022: A Florida-Based Health Insurance Company That Scammed Patients was Forced To Refund $100 Million After An FTC Investigation. One company, Health Insurance Innovations Inc. (later known as Benefytt Technologies), began using junk plans to scam consumers into paying exorbitant fees, often without their permission, for little coverage using deceptive websites such as “Obamacareplans.com.” In 2022, the Federal Trade Commission ordered the company to pay $100 million in refunds to customers who fell victim to the scam.
The Biden Administration Has Worked To Promote Informed Consumer Choice By Expanding Access To ACA Marketplace Plans And Launching Outreach Campaigns
The Biden Administration Has Expanded Critical Health Subsidies Allowing Millions of People To Access No- or Low-Cost ACA Plans. “Low-income Americans who missed signing up for 2022 Affordable Care Act coverage can now enroll in plans with $0 premiums through the federal exchange’s website. Those with incomes less than 150% of the federal poverty level – $19,320 for an individual and $39,750 for a family of four – can select policies on healthcare.gov through a special enrollment period, the Centers for Medicare and Medicaid Services told CNN exclusively on Monday. Most people will be able to select plans with no premiums, while others may have to pay a few dollars.
The Biden Administration Has Promoted Informed Consumer Choice By Launching Advertising and Outreach Campaigns About Expanded ACA Access. “The agency is launching advertising and outreach campaigns to spread the word about the new special enrollment period, which lasts for the rest of the year. The effort will also target those experiencing certain life changes, such as losing job-based coverage, getting divorced or aging out of a parent’s policy, which have always allowed them to sign up for Obamacare policies during the year.” [CNN, 3/21/22]
While The Biden Administration Works To Lower Costs, Congressional Republicans Are Passing Legislation To Boost Junk Plans
The Biden Administration Is Working To Close Trump-Era Loopholes That Have Propped-Up Junk Plans. The Biden administration has worked to lower health care costs and crack down on “junk plans” like STLDI, proposing new rules closing Trump-era loopholes allowing health insurance companies to mislead patients and sell plans that provide very limited coverage. Under the new rules, STLDI plans will be limited to a maximum of 3 months – instead of 3 years as was allowed under the Trump administration – and will be required to disclose benefit limits as well as potential exposure to exorbitant surprise fees that disproportionately impact lower-income households and people of color.
…Meanwhile, Congressional Republicans Are Passing Legislation To Weaken Protections For Millions of People with Pre-Existing Conditions and Boost Health Insurance Plans That Fail To Cover Key Prescriptions & Hospital Care. In June 2023, Republicans held a markup on multiple pieces of legislation promoting “junk plans” that can discriminate against people with pre-existing conditions and fail to cover essential services like hospital visits and prescription drugs in order to undermine the ACA. One of these bills would expand access to association health plans (AHPs), a type of junk plan that leaves behind sick and at-risk individuals and undermines the ACA. Another would promote the use of non-ACA-compliant plans and other self-funded benefit plans. Further, these types of plans exploit communities of color and other marginalized communities, making Black, Latino, Asian, Indigenous, and LGBTQI+ people in America – who are more likely to be living in poverty than their White, heterosexual counterparts – more likely to face higher premiums.