Warner, Kaine & Colleagues Urge Biden Administration to Strengthen Protections Against "Junk" Insurance Plans

Letter

Dear Secretaries Becerra, Su, and Yellen:

We write in support of the Department of Health and Human Services (HHS), the Department of
Labor, and the Department of the Treasury's (collectively, the Departments') long-awaited
proposal to address short-term limited duration insurance (STLDI) plans.1 In 2018, the previous administration sought to sabotage the Affordable Care Act (ACA) by expanding access to
STLDI plans that can deny coverage to people with preexisting conditions and fail to provide
adequate health care coverage when Americans need it most. While STLDI plans have their
purpose, such plans provide junk coverage when compared to high-quality, comprehensive
coverage. We applaud your efforts to protect Americans who may have been duped into these
junk plans, and urge the Biden Administration to swiftly finalize the rule and bolster our
collective efforts to expand access to affordable, comprehensive health coverage.

In 2018, regulations issued by the previous administration rewrote the definition of STDLI
coverage, allowing these plans to expand their term of coverage from three months to 364 days
with the option to renew for up to three years.2 Unlike marketplace plans, STLDI plans are not
required to comply with consumer protections that limit out-of-pocket costs or coverage of
essential health benefits, including mental health services, treatment for substance-use disorder,

1Short-Term, Limited-Duration Insurance; Independent, Noncoordinated Excepted Benefits Coverage; Level-Funded Plan Arrangements; and Tax Treatment of Certain Accident and Health Insurance, 88 FR 44596 https://www.federalregister.gov/documents/2023/07/12/2023-14238/short-term-limited-duration-insurance-independentnoncoordinated-excepted-benefits-coverage
2 Short-Term, Limited-Duration Insurance, 83 FR 38212 (2018): https://www.federalregister.gov/documents/2018/08/03/2018-16568/short-term-limited-duration-insurance

prescription drugs, and maternity care. Furthermore, these plans engage in discriminatory
practices, such as retroactive coverage rescissions, medical underwriting, and lifetime and annual
caps, which were commonplace before the ACA. Since 2018, many consumers shopping for
coverage may not have understood that they were buying a plan that puts them at risk for preexisting conditions and coverage gaps.3

With this new proposal, the Biden Administration is taking action to better protect consumers
and promote access to affordable, comprehensive health insurance. We appreciate the
Department's efforts to hold true to a definition of "short-term" that is just that -- short term.
STLDI policies were originally intended to temporarily fill gaps in coverage while people
transition between jobs or when students were required to disenroll from student health coverage
over the summer months. As such, we believe these plans should be strictly limited to three
months without the option for extensions.

We also strongly support the proposal to prevent insurance companies or brokers from
repeatedly enrolling the same consumer in STLDI coverage, a practice known as "stacking," and
request that the Administration do more to prohibit stacking of STLDI plans across different
issuers. In addition, as we continue to ensure that Americans have access to affordable coverage,
it is critically important for Congress, state regulators, researchers, stakeholders, and federal
departments to understand the true impact of the junk insurance market on the ACA
marketplaces and other forms of high-quality coverage. As a part of this rulemaking, we strongly
urge the agencies to implement policies that would bring greater transparency to these products
including disclosure and reporting requirements for intermediary entities such as brokers,
associations, and lead generators.

Finally, we urge the Administration to consider additional protections for individuals who may
be shopping for coverage during the ACA's annual Open Enrollment (OE) period.

Fraudsters, always looking for opportunities to take advantage of consumers, are enrolling
individuals into plans without their consent, and numerous studies have documented the use of
deceptive and misleading marketing to lure consumers into junk plans.4 We urge the
Departments to proactively work with state insurance commissioners to address misleading
marketing practices. High-quality insurance coverage is now more affordable than ever before
thanks to the enhanced premium tax credits passed as part of the American Rescue Plan Act and
the Inflation Reduction Act, as well as the Administration's efforts to fix the "family glitch"
which eliminated the subsidy cliff that impacted over five million Americans.5 It is our
responsibility to ensure that the OE period, which is set to begin on November 1, is as successful
as possible in promoting access to high-quality, affordable coverage.

3 Schwab, R. and Volk, J. The Perfect Storm: Misleading Marketing of Limited Benefit Products Continues as Millions Losing Medicaid Search for New Coverage. Georgetown University Center on Health Insurance Reforms. July 2023. https://georgetown.app.box.com/v/the-perfect-storm-august-2023
4 Government Accountability Office. Private Health Coverage: Results of Covert Testing for Selected Offerings. August 2020. https://www.gao.gov/products/gao-20-634r
5 Cox, C., Amin, A., Claxton, G., and McDermott, D. The ACA Family Glitch and Affordability of Employer Coverage. KFF. April 7, 2021. https://www.kff.org/health-reform/issue-brief/the-aca-family-glitch-and-affordability-of-employer-coverage/

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For too long, junk plans were able to proliferate unchecked, resulting in increased exposure to
financial harm for consumers. By finally limiting the duration of these plans and providing better
protections for consumers, we are helping ensure that when families spend their hard-earned
dollars on health insurance, they get the high-quality coverage they deserve.

Sincerely,

Source