By Jarrett Renshaw
(Reuters) - The Biden administration on Thursday will finalize a rule aimed at cracking down on short-term health insurance plans and surprise medical bills, the latest steps in its effort to lower consumer costs across a broad range of industries.
The rule, first introduced last July, places tighter restrictions on short-term insurance products that are supposed to serve as a lifeline for more than 1 million Americans who rely on stop-gap insurance, such as when switching jobs.
The Biden administration says companies exploited changes made under former President Donald Trump that allowed watered-down insurance plans to be offered for a much longer period, up to three years, often resulting in surprise medical bills,
Short-term insurance plans misled consumers into thinking they were buying comprehensive health insurance, but included things like low caps on benefits and no coverage for pre-existing conditions, said Neera Tanden, who serves as the domestic policy adviser to President Joe Biden.
"That's not really insurance. That's a scam and the president really believes that the American people do not want to be taken for suckers," Tanden said.
The administration of Barack Obama in 2016 limited short-term insurance plans to three months to try to get more people on year-round plans, but regulations adopted by the Trump administration in 2018 allowed people to stay on such plans for 12 months and renew them for three years.
The final rule finalized on Thursday by the Department of Health and Human Services would restrict plans to three months, with only a short extension, Tanden said. It would also require companies to explicitly and more clearly disclose what's covered and what's not, she added.
U.S. inflation has fallen, job growth and spending continue to be strong and overall the U.S. economy is performing better than expected. But the high cost of consumer items from groceries to housing is contributing to American voters' concerns about Biden's economic policies.
Biden has successfully pressured companies such as Airbnb and Live Nation to limit junk fees, or extra charges, that customers pay when booking concert tickets, hotels and airfares. The administration has also forced credit card customers to slash late fees, from an average of $31 down to $8.
The White House Council of Economic advisers estimates that the administration's actions will eliminate more than $20 billion in junk fees annually.