A three-judge panel on Friday upheld the Trump administration's controversial expansion of short-term, limited-duration health plans.
In a split decision, the U.S. Court of Appeals for the District of Columbia Circuit rejected insurer group Association for Community Affiliated Plans' claims that the administration didn't have the power to issue the 2018 rule and that its decision was an error in judgment because it was inconsistent with the intent of the Affordable Care Act.
"So long as the departments have acted within the bounds of their statutorily delegated authority, that policy judgment is theirs to make," Judge Thomas Griffith wrote for the court. "When Congress delegates decision-making authority to an agency, it sacrifices control for flexibility."
ACAP had argued that Congress intended to create one individual market when it passed the landmark healthcare law, making it unreasonable for regulators to allow a "shadow" market of non-ACA compliant plans to exist. But Griffith threw cold water on that argument, noting the exception for short-term, limited-duration plans is "baked into the statute itself" since the ACA exempts those plans having to include particular benefits.
Regulators "did not fashion a new category of insurance out of whole cloth to evade the ACA's restrictions; they simply crafted rules to clarify which policies fall within the exception Congress created," Griffith wrote.
In her dissent, Judge Judith Rogers said because the plans are exempt from many of the ACA's requirements, short-term plan insurers can cut costs, conduct price discrimination or refuse to cover potential beneficiaries based on age and preexisting conditions.
"As a result, they leave enrollees without benefits that Congress deemed essential and disproportionately draw young, healthy individuals out of the 'single risk pool' that Congress deemed critical to the success of the ACA's statutory scheme," she wrote.
But Griffith wrote federal agencies often have to decide among policy tradeoffs, which is "exactly what happened here." The Obama administration changed the definition of short-term, limited-duration health plans in 2016 to address concerns about rising premiums and falling enrollment.
"Two years later, confronted by still-increasing premiums and the Medicaid coverage gap, the (Trump administration) decided that expanding affordable coverage options was the way to go," Griffith wrote. "If Congress disagrees with that decision, it can take back the reins."
Or a new presidential administration can come into office and decide how to rebalance competing policy priorities.
ACAP plans to appeal the decision to the full D.C. Circuit.
"So long as junk insurance plans are permitted to compete directly with comprehensive, Affordable Care Act-compliant insurance plans, the healthcare protections of the ACA—and the consumers who rely on them— are in jeopardy," ACAP said in a statement.
U.S. District Judge Richard Leon in Washington, D.C. in 2019 upheld the Trump administration's right to change the rules around short-term, limited-duration plans.
The Trump administration in 2018 overturned an Obama-era regulation limiting short-plans to three months. The rule change allowed people to buy short-term, limited-duration plans lasting no more than 12 months and to renew them for up to three years.
Under the earlier rule, insurers could only issue short-term plans lasting three months. The Obama administration put the rule in place because it was concerned people would be attracted to the low premiums of so-called "junk plans" but not get the coverage they expected.
Regulators had hoped the change would encourage people to enroll in ACA-compliant plans. But the Trump administration overturned the rule, claiming it would give people more affordable insurance options and make it easier for people to maintain coverage.
Experts and consumer advocates often criticize short-term, limited-duration plans because they don't have to cover people with preexisting conditions or so-called "essential benefits" like maternity care or prescription drugs. Likewise, people often have trouble renewing the plans after using their coverage because insurers don't want to pay out benefits.
In June, the House Committee on Energy and Commerce wrapped up a year-long investigation into the practices of insurers selling short-term, limited-duration plans. It found the plans often have high out-of-pocket costs for consumers due to coverage gaps, and that half of states aren't providing adequate oversight of such plans.
