The US District Court of Appeals for the District of Columbia on Friday upheld the Trump administration’s expansion of controversial short-term health plans, many of which are being sold as a less expensive alternative to Obamacare policies.
The lawsuit, brought by a coalition of nonprofit insurers that sell plans on the Affordable Care Act exchanges and by patient assistance groups, centers on the administration extending the duration of short-term plans to just under one year, instead of three months. The rule, which was issued in 2018, stems from an executive order President Donald Trump signed the year before.
Short-term plans, which have been available for years and were originally designed to fill a temporary gap in coverage, are typically cheaper than Obamacare policies. But that’s because they are allowed to exclude those with pre-existing conditions and to base rates on an applicant’s medical history, unlike Obamacare plans.
Opponents of these policies say they could hurt patients who need coverage and could roil the Affordable Care Act markets by drawing healthier consumers away from the exchanges and pushing up the premiums for those who remain.
But in a 2-to-1 decision, the appeals court said it was not convinced by the arguments that the rule expanding short-term plans is contrary to law and arbitrary and capricious.
“To be sure, Congress hoped that most individuals would purchase ACA-compliant plans as their primary insurance, and it provided incentives to encourage them to do so. But it did not foreclose other options,” Judges Thomas Griffith and Gregory Katsas, who upheld the rule, wrote in their decision.
The dissenting judge, Judith Rogers, said the rule “flies in the face” of Congress’ plan for the Affordable Care Act “by expanding a narrow statutory exemption beyond recognition to create an alternative market for primary health insurance that is exempt from the ACA’s comprehensive coverage and fair access requirements.”
Margaret Murray, CEO of the Association for Community Affiliated Plans, the lead appellant, said the group will ask the full DC Circuit to hear the case.
“So long as junk insurance plans are permitted to compete directly with comprehensive, Affordable Care Act-compliant insurance plans, the health care protections of the ACA – and the consumers who rely on them – are in jeopardy,” she said in a statement.
The Democratic-led House Committee on Energy and Commerce last month released a nearly 200-page report that found enrollment in short-term plans increased by 600,000 last year to 3 million policyholders in nine companies examined. Also, these policies often leave people saddled with thousands of dollars in medical debt because they do not provide comprehensive coverage, the report said.
The Department of Health and Human Services called the ruling a major win.
“Thanks to the President’s actions and today’s decision, millions of Americans can have access to affordable, short-term insurance plans that may make sense for their needs,” said Michael Caputo, the agency’s assistant secretary for public affairs.
A US District Court judge last July also upheld the rule.
The fate of the entire Affordable Care Act is now in the hands of the Supreme Court, which agreed to hear it in its next term. The Trump administration has sided with a coalition of Republican attorneys general, who argue that Congress’ reduction of the individual mandate penalty to $0 has rendered the mandate unconstitutional. And invalidating it should bring down the entire law, including protections for people with preexisting conditions.
A federal appeals court in December agreed with a lower court ruling that the individual mandate is now unconstitutional, but the judges punted to the lower court the decision on whether that means the entire law must fall. The US District Court judge struck down the full law in December 2018.