The ACA didn't take a narrow definition of short-term health insurance and make it 'sacrosanct,' the judge ruled.
A federal judge sided with the Trump administration Friday, affirming a final rule that expanded access to short-term limited-duration insurance (STLDI).
The decision effectively greenlights an effort that some had warned could contribute to instability in the individual market for health plans that provide what the Affordable Care Act defines as minimum essential benefits. Short-term health plans are often cheaper options, but they may provide less coverage because they are not required to cover preexisting conditions or meet the ACA's other requirements.
Under the Obama administration, in 2016, access to STLDI was restricted to three months, due to concerns that rising premiums for ACA-compliant plans could prompt healthy consumers to choose cheaper, skimpier short-term coverage options instead. Under the Trump administration, in 2018, the permissible duration for STLDI was expanded to 12 months, with renewals allowed up to three years.
That reversal was a reasonable interpretation of the statutory language, according to U.S. District Judge Richard Leon in the District of Columbia.
The plaintiffs had effectively argued that the ACA took a narrow definition of STLDI and made it "sacrosanct," Leon wrote in his ruling Friday. But that's not the case, he reasoned.
"It is not my role to interfere with or disrupt the balance struck by policymakers where, as here, there is no indication that those charged with implementing the balance have failed to observe it," Leon wrote.
"To be sure, the ACA's various reforms are interdependent and were designed to work together as features of the individual Exchange markets," he wrote. "However, Congress clearly did not intend for the law to apply to all species of individual health insurance. In addition to maintaining the STLDI exemption, Congress exempted multiple forms of individual health insurance from the ACA's reforms and the State-specific risk pools.
"In other words, lawmakers were not rigidly pursuing the ACA-compliant market at all costs, e.g., at the risk of individuals going without insurance altogether," Leon added. "Moreover, while Congress certainly sought to foster a robust ACA-compliant market, its chosen methods for doing so were embodied by the individual mandate and tax penalty, not the definition of STLDI !"
The plaintiffs, led by the Association for Community Affiliated Plans (ACAP), said they will appeal Leon's decision.
"We remain firm in our contention that the Trump administration's decision to expand dramatically the sale of junk insurance violates the Affordable Care Act and is arbitrary and capricious," ACAP CEO Margaret A. Murray said in a statement released to HealthLeaders.
"Indeed, the district court itself recognized that administration's decision allows junk insurance to compete directly with comprehensive, Affordable Care Act-compliant insurance plans," Murray added. "That result subverts the health care protections of the ACA. Junk insurance, no matter what it’s called, is an inferior and hazardous substitute for comprehensive coverage.
"We are confident that the appellate court will see this differently," she said.
The National Alliance on Mental Illness (NAMI), which joined ACAP and several other organizations as plaintiffs, expressed disappointment in Leon's ruling, noting that short-term plans can deny coverage and care for mental health conditions.
NAMI Acting CEO Angela Kimball said in a statement the organization will continue its decades-long fight for fair and equal coverage for mental healthcare.
"We have no intention of stopping until we end discriminatory coverage," Kimball said. "This ruling is a step in the wrong direction. It lets junk plans compete with comprehensive health insurance, even though they don't have to provide the same level of mental health coverage—or any mental health coverage at all."
"We will join an appeal of this decision because the health of our nation includes its mental health," she added. "It is imperative that insurance plans provide essential mental health benefits for all Americans, plain and simple."
If the plaintiffs do file an appeal, the dispute over STLDI will proceed to the D.C. Circuit Court, where a parallel dispute over Association Health Plans (AHP) is already pending. A different federal judge ruled in March that the Trump administration's AHP rule was an impermissible end-run around the ACA.
The STLDI and AHP rules were introduced last year as side-by-side prongs in the administration's push to expand access to cheaper insurance despite the ACA.
Health and Human Services Secretary Alex Azar issued a statement hailing Friday's decision as "a clear victory for American patients who saw their costs rise and choices disappear" under the ACA.
"President Trump has shown that we can open up dramatically more affordable options for Americans who buy their own insurance while still always protecting patients with preexisting conditions," Azar said. "The President and HHS will continue taking action to provide all Americans with ways to finance their care that provide the affordability they need, the options and control they want, and the quality they deserve."
This story was updated to include statements from NAMI Acting CEO Angela Kimball and from HHS Secretary Alex Azar.
“Congress clearly did not intend for the [ACA] to apply to all species of individual health insurance.”
Judge Richard Leon
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.
The recent reversal of the Obama administration's 2016 move to restrict short-term health plans was reasonable, the judge ruled.
The plaintiffs still say the Trump administration expanded 'junk insurance' arbitrarily and in violation of the Affordable Care Act.