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March 28 (UPI) -- The Biden administration announced on Thursday a new rule to crack down on so-called "junk" health insurance where companies provide inexpensive healthcare coverage from plans that provide few services. The administration said those plans "scammed" users into making monthly payments but in the end, left the customers on the hooks for tens of thousands of dollars in medical bills.
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"As the president has said, people hate being played for suckers and the current practice of offering low-quality insurance that people pay into, but then provides no coverage when people need it, is a bait and switch," the White House said.
The new rule will limit "short-term" insurance plans to three months initially and four additional months, instead of up to three years. Plans also must clearly state what they cover and the plan's limits.
Short-term insurance plans blossomed under a 2018 rule change led by the Trump administration. Such short-term plans are not bound by the consumer protections required by the Affordable Care Act.
The White House claimed that a Republican plan would allow insurance companies selling such plans to use loopholes to evade protections insurance customers need to find a plan that's right for them, including coverage of pre-existing conditions.
Some ACA supporters fear that such short-term plans would siphon off younger, healthier insurance seekers away from Obamacare, a key component in making sure the ACA can be paid for nationally.
