A federal judge on Friday ruled the Trump administration's expansion of so-called short-term, limited-duration health insurance plans can move ahead, rejecting an insurer group's attempt to strike down the move.
The plaintiff, the Association for Community Affiliated Plans, immediately said it will appeal. The group represents not-for-profit health plans deeply invested in the Affordable Care Act exchanges.
In his written decision, U.S. District Judge Richard Leon in Washington, D.C., said the controversial 2018 regulation could benefit the insurance market, disputing the ACAP's claim that it would help drive death spirals for the Obamacare exchanges.
"Not only is any potential negative impact from the 2018 rule minimal, but its benefits are undeniable," Leon wrote.
He said Congress' effective axing of Obamacare's individual mandate penalty for the uninsured makes the option for cheaper plans more desirable, since more people would likely forgo insurance rather than pay for expensive premiums in the Affordable Care Act's exchanges.
Leon acknowledged that the ACA established "interdependent" reforms designed to work together throughout the individual market. But he also pointed out that the law exempted many types of health insurance and grandfathered in certain 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," he wrote.
The ACAP lawsuit has dragged on for months, although the judge spelled trouble for the case from the start.
In the first round of arguments last October, Leon urged ACAP's lawyers to drop the lawsuit until data showed the ACAP plans were seeing irreparable harm to their business.
The rule, finalized in August 2018 and in effect since early October 2018, allows up to 12 months of coverage through short-term plans. People can renew this coverage for up to 36 months.
The plans don't have to cover people with pre-existing conditions, nor are they subject to the ACA's mandates such as coverage for the 10 essential benefits, includinge mental healthcare, maternity care and prescription drugs.
In a second round of arguments in May, Leon signaled reluctance to block the regulation in the absence of congressional action to address the issue.
He noted in his decision that the plaintiffs appeared to agree that Congress, by not addressing short-term plans, had left a gap for agencies to fill in interpreting the statute. And he emphasized that the Obama administration didn't curb enrollment in these plans until 2016, two years after the ACA went into effect.
The ACAP said it isn't finished with the lawsuit yet, and Leon last October outright accused the group's lawyers of filing the claim early in order to "jump the line" to the U.S. Supreme Court.
"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. Indeed, the district court itself recognized that the administration's decision allows junk insurance to compete directly with comprehensive, Affordable Care Act-compliant insurance plans," ACAP CEO Margaret Murray said in a statement.
Leon's decision follows on the heels of high-profile arguments over the constitutionality of the ACA itself, heard earlier this month by a panel of judges of the 5th U.S. Circuit Court of Appeals.
Leon made an apparent reference to that pending appeal, pointing out in his brief that Congress opted for the tax penalty and the individual mandate as its chosen tool to build healthy exchange markets.
