Health care may not currently be a major issue in politics, with the disputes over the Affordable Care Act and prescription drug initiatives seemingly resolved. However, there are still important ongoing disagreements that are worth paying attention to. These disputes not only impact millions of Americans but also highlight the significant philosophical differences between the two major parties.
One recent example of this ongoing debate is the Biden administration’s decision to revise the rules for “short term” health insurance. Democrats argue that these changes are necessary to protect people from inadequate coverage that could result in overwhelming medical bills. On the other hand, Republicans argue that these new restrictions will eliminate affordable coverage options that some individuals prefer.
This argument reflects the perennial contention between Democrats and Republicans when it comes to health care and social welfare. It centers around how extensively the federal government should intervene in markets to ensure people are protected from risks and have a certain level of economic security.
It’s notable that the rules being rewritten by the Biden administration were initially implemented by the Trump administration. This not only demonstrates the differing approaches of the two parties but also serves as a concrete example of how the current president governs compared to his potential challenger in the 2024 election.
To understand the new rules and the arguments surrounding them, it’s important to consider how the Affordable Care Act transformed American health care. One of its major goals was to reform the individual insurance market, which consisted of individuals purchasing private coverage without employer involvement. Prior to the ACA, these individuals often struggled to find affordable comprehensive plans, as insurers could charge higher premiums or deny coverage based on preexisting conditions. Additionally, the available plans frequently had significant gaps in coverage, leaving individuals responsible for large medical bills. The ACA addressed these issues by introducing new regulations that required health plans to include essential benefits, offer free preventive care, and impose limits on out-of-pocket spending. These plans also had to be available to everyone at consistent prices, regardless of preexisting conditions. However, an exception was made for “short term/limited duration” plans, which the federal government could regulate. The Obama administration imposed restrictions on these plans, limiting their duration to three months with an option to renew for up to a year. Insurers were also required to provide clearer information about the coverage offered by these policies.
Enter the Trump administration, which sought to dismantle the ACA and its insurance regulations. Unable to repeal the law, officials attempted to undermine it through regulatory changes. One such change was loosening the rules on short-term plans, allowing people to hold these policies for up to three years as a potential alternative to ACA plans. However, these short-term plans were not equivalent in terms of coverage guarantees, frequently lacking important benefits like prescription drug coverage. Many individuals who purchased these plans found themselves burdened with unexpectedly high medical bills, often unaware of the limited coverage they had chosen. This was not accidental, as insurers aggressively marketed these plans while downplaying or omitting information about coverage limitations. A study found that a significant portion of individuals seeking insurance received misleading information about what short-term plans actually covered.
Last week, the Biden administration cited these issues when announcing new rules for short-term plans that essentially reverse the changes made by the Trump administration. Under the new regulations, insurers must provide clearer information about coverage limitations and limit plan duration to three months, with the possibility of a one-month extension. The rules also place restrictions on how “indemnity” plans can be marketed, making it clear that these plans, which offer limited cash sums for medical expenses, do not substitute comprehensive health insurance. While these rules are not yet final and are open to public comment, it is expected that they will be implemented later this year or early next year.
Supporters of short-term plans argue that they offer better overall coverage, taking into account premiums, deductibles, and the ability to choose doctors and hospitals. They argue that warnings and comparisons of plan details sufficiently inform consumers about the limitations of these policies. However, proponents of the new rules believe that tighter regulations are necessary, as most consumers lack comprehensive knowledge about insurance coverage options. They argue that tighter regulations will ensure that insurers are more transparent about what their plans do and do not cover, protecting individuals from unexpected financial burdens.
In the debate over universal health insurance, short-term plans have their advocates who believe they offer viable alternatives to ACA policies. However, concerns over confusion and inadequate coverage have led to the Biden administration’s efforts to revise the rules. It remains to be seen how the final regulations will take shape, but the discussion surrounding this issue highlights the ongoing divide on health care policy in the United States.