House Democrats are calling on HHS to end 'junk plans'
These plans were not intended as long-term, comprehensive coverage and do not have to abide by consumer protections in the ACA, letter says.
Photo: Jose Luis Pelaez Inc./Getty Images
House Democrats have asked the Department of Health and Human Services to end so-called "junk plans."
A group of 42 House Democrats sent a letter to HHS asking the department to take immediate action to rein in the expansion of short-term, limited duration insurance (STLDI) plans, commonly known as junk plans.
These plans, not intended to be long-term, comprehensive coverage, do not have to follow critical consumer protections in the Affordable Care Act. They can deny coverage for pre-existing conditions, limit benefits and charge differing premiums based on age and health status.
The letter urges HHS Secretary Xavier Becerra to reverse the final rule issued by the Trump administration that expanded the short-term, limited duration plans and restore them to their intended purpose as short-term, temporary coverage.
Traditionally, short-term plans cover a maximum period of three months, without the ability to renew.
They were designed to provide temporary coverage for individuals transitioning between health policies, such as an individual in between jobs, or a student taking a semester off from school.
WHAT'S THE IMPACT?
The Obama Administration had 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.
Democrats argue short-term insurance plans do not offer meaningful coverage and continuing to allow extended use of these plans isn't beneficial to patients. The plans can also 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.
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.
THE LARGER TREND
Back in 2020, an appeals court upheld the sale of short-term limited duration insurance plans championed by the Trump Administration. The court said the sale of short-term limited duration insurance plans is neither contrary to law nor arbitrary and capricious.
ON THE RECORD
"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 letter states. "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."
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