WASHINGTON, DC – Today, Rep. Cindy Axne (IA-03) led 41 of her colleagues in a letter asking the US Department of Health and Human Services (HHS) to take immediate action to rein in the expansion of short-term, limited-duration insurance (STLDI) plans, commonly known as “junk plans,” that are being offered to Americans.
STLDI plans to entice consumers with lower premiums than comprehensive health coverage, but they do not have to abide by critical consumer protections in the Affordable Care Act (ACA). These junk plans can charge differing premiums based on age and health status, deny coverage for pre-existing conditions, limit benefits, and more.
“I’m incredibly proud of the work Congress and the Biden Administration have done to strengthen the ACA and make health insurance more affordable for millions of Americans, and it’s imperative we continue that good work by protecting consumers from being duped by junk plans,” said Rep. Axne. “These plans are a raw deal and come with significant financial risk for consumers, and it’s high time we moved to rein them in.”
Junk plans were never intended to be long-term, comprehensive coverage, and often leave Americans like 31-year-old Sam Bloechl on the hook for hundreds of thousands of dollars in medical debt. Bloehl Purchased a bundle of junk plans, was diagnosed with non-Hodgkin’s lymphoma, and then was denied health insurance coverage. He was left with more than $800,000 in medical bills.
The Obama Administration limited the duration of STLDI plans to less than three months. However, in 2018 the Trump Administration issued a final rule that allowed individuals to purchase STLDI plans for up to a year, with up to three years of renewable coverage.
“Junk plans pose clear risks to consumers, undermine the strength of the ACA, and are incompatible with the goal of making affordable, high-quality health insurance accessible to all Americans,” the members wrote. “We strongly urge HHS to take overdue action to reinstate the 90-day limit on STLDI plans, curtail the ability to renew STLDI plans, and redouble efforts to protect consumers from being directed toward STLDI when they’re searching for traditional health insurance plans. ”
The Biden Administration has twice Issued executive orders aimed at strengthening the ACA, including by reviewing rules inconsistent with that goal, but to date the 2018 STLDI rule remains in effect.
“Short-term insurance plans do not offer meaningful coverage and continuing to allow extended use of these plans isn’t beneficial to patients,” said Mary Dwight, senior vice president and chief policy and advocacy officer at the Cystic Fibrosis Foundation. “We urge the administration to reverse the rule to its original purpose – for these plans to be used in the short-term while the individual marketplace provides the comprehensive coverage of both healthy individuals and those with chronic diseases, such as cystic fibrosis, need to manage their care.”
“Short-term plans leave patients and consumers vulnerable to physical and financial harm by relying on practices such as pre-existing condition exclusions and retroactive coverage denials that were commonplace before the passage of the ACA,” said Leukemia and Lymphoma Society CMO, Dr. Gwen Nichols. “It is critical that the Administration take immediate steps to protect patients from these harmful products, and we applaud Rep. Axne for her leadership on this important letter.”
Read the full letter HERE:
Dear Secretary Becerra:
We are writing to request that the Department of Health and Human Services (HHS) and the Biden Administration take action to protect Americans from short-term, limited-duration insurance (STLDI) plans that fail to offer comprehensive health care coverage, commonly known as “junk plan.” Specifically, we urge you to reverse the final rule issued by the previous administration that expanded STLDI and restore STLDI to its intended purpose as short-term, temporary coverage.
On January 28th, 2021, President Biden signed Executive Order 14009 aimed at rolling back efforts to undermine the Affordable Care Act (ACA) and making high-quality health care accessible and affordable for every American. Congress and the Biden Administration have since made substantial progress toward achieving that goal. The American Rescue Plan Act (ARPA) increased the generosity of ACA premium tax credits and made millions of additional consumers immediately eligible for those credits. Under provisions in ARPA, an individual will pay no more than 8.5% of their income in premiums for a benchmark plan, including approximately 3.5 million Americans with incomes above 400% of the federal poverty level who had previously been ineligible for premium subsidies. Eligible consumers with incomes below 150% of the federal poverty level, an estimated 5.1 million Americans, can select a benchmark plan with no premiums. When combined with an extended 2021 Special Enrollment Period and active promotion of the 2022 Open Enrollment Period, Americans had more time to find a plan with lower premiums through the Marketplace.
These efforts have helped millions of Americans find more affordable health insurance. According to recent enrollment data, 14.5 million Americans selected health insurance coverage through the Marketplace for 2022—including nearly 6 million new consumers. Those who enrolled saved, on average, $800 per person in premiums this past year. We are proud to have helped deliver real savings for working families seeking to budget for health insurance, child care, and other household essentials as part of the American Rescue Plan.
However, the expansion of STLDI undertaken by the previous administration threatens to undermine these hard-fought efforts. Under a final rule issued in August 2018, the STLDI plan duration limit was extended from 90 days to up to 364 days, including an option to renew coverage for up to 3 years. Crucially, STLDI plans do not have to comply with consumer protections included in the ACA: they may opt not to cover all ten essential health benefits, include medical underwriting, deny coverage for pre-existing conditions, charge higher cost-sharing amounts, and impose lifetime limits. One analysis of STLDI plans found that 43% of plans surveyed failed to cover mental health services, 71% of plans did not cover outpatient prescription drugs, and no plans covered maternity care.
While STLDI plans serve a purpose for those who need temporary coverage, such as workers transitioning between jobs who do not elect COBRA, they are not comprehensive health care coverage, and it is our constituents who suffer from the lack of proper guardrails on STLDI plans. Individuals looking for temporary health insurance are often enticed by the cheaper premiums these plans offer, only to find themselves with inadequate coverage when they need care. The financial consequences for consumers can be significant. In one case reported by NPR, Sam Bloechl, a 31-year-old man diagnosed with stage 4 non-Hodgkin’s lymphoma, was left with bills totaling over $800,000 after his short-term health insurance plan denied his care, citing a previous visit to a chiropractor as evidence of a pre-existing condition.
Junk plans pose clear risks to consumers, undermine the strength of the ACA, and are incompatible with the goal of making affordable, high-quality health insurance accessible to all Americans. We strongly urge HHS to take overdue action to reinstate the 90-day limit on STLDI plans, curtail the ability to renew STLDI plans, and redouble efforts to protect consumers from being directed toward STLDI when they’re searching for traditional health insurance plans.