October 09, 2018

S.J. Res. 63 – Disapproval of Short-Term Limited Duration Insurance Rule

NOTEWORTHY

Background: Senator Baldwin introduced S.J.Res. 63, a joint resolution of congressional disapproval under the Congressional Review Act of the final rule to deregulate short-term limited duration plans. The resolution currently has the support of all 49 Senate Democrats.

Floor Situation: The Senate is expected to conduct a roll call vote on the motion to proceed to S.J.Res. 63 this week. This vote is a simple majority threshold.

Executive Summary: The resolution disapproves a final rule by the Departments of Treasury, Labor, and Health and Human Services published in the Federal Register on August 3. The resolution would overturn the rule, giving it “no force or effect.” It would prohibit any “substantially similar” rule from being reissued in the future. 

OVERVIEW OF THE ISSUE

The Trump administration’s rule to deregulate short-term limited duration plans went into effect on October 2. Consistent with current law, it allows short-term plans to be made available for up to one year and renewable for up to three years. The Obama administration limited these plans to 90 days of coverage and restricted their renewability.

The joint resolution objects to the rule submitted by the Departments of Treasury, Labor, and Health and Human Services relating to “Short-Term, Limited Duration Insurance” to the federal register on August 3, 2018. The resolution states the rule would have “no force or effect.”

The joint resolution was filed under the Congressional Review Act, a 1996 statute that provides Congress with an expedited process to nullify federal agency rules it determines to be unnecessary or excessive. Rather than being subject to the 60-vote filibuster in the Senate, CRA resolutions require a simple majority in both chambers to pass. Should the House and Senate pass the resolution, the president could veto it. To override a veto, both chambers would need to secure a two-thirds vote.  

CONSIDERATIONS ON THE BILL

Since 1996, short-term plans have been defined by HHS as coverage that is available for less than 12 months. In 2016, the Obama administration restricted these plans with a rule to limit coverage t0 three months. The Trump administration’s deregulation returns to the original definition of short-term coverage, allowing these plans to be available for up to 364 days and renewed for up to three years.

Because these plans are not required to follow federal health insurance regulations – most notably guaranteed issue, guaranteed renewability, and coverage for essential health benefits – they are sold at a much more affordable price. These plans can be purchased at any point as they are not limited to the Obamacare annual open enrollment period. For Americans who have been priced out of the individual market and do not qualify for federal subsidies, these plans provide a viable alternative. Americans who qualify for federal subsidies or have a pre-existing medical condition, however, would continue to have access to plans on the Obamacare exchange.

The new rule is intended to increase coverage options for consumers and has no impact on the Obamacare plans available in the individual market. The Trump administration has made it clear these plans are not for everyone; short-term plans are an alternative to the plans on the Obamacare exchange. The final rule also ensures people are protected by requiring issuers to notify consumers about the type of coverage they are purchasing.

As outlined by the Congressional Research Service, the Trump administration’s rule does not impede states’ authority to regulate short-term coverage. States will continue to have the same authority to regulate short-term plans they have had for decades. The rule would not preempt actions by states such as California, New York, and New Jersey to ban the sale of short-term coverage. Other states have limited coverage availability to three or six months.

NOTABLE BILL PROVISIONS

The joint resolution states that “Congress disapproves the rule submitted by the Secretary of the Treasury, Secretary of Labor, and Secretary of Health and Human Services relating to ‘Short-Term, Limited Duration Insurance’ (83 Fed. Reg. 38212 (August 3, 2018)), and such rule shall have no force or effect.”

ADMINISTRATION POSITION

The Trump administration continues to defend its rule.

COST

To date, the Congressional Budget Office has not issued a cost estimate for the joint resolution.

AMENDMENTS

Amendments are not permitted on Congressional Review Act resolutions of disapproval in the Senate.