The Court of Appeals for the District of Columbia has upheld a 2018 Trump administration rule that significantly expands the sale and renewal of short-term, limited duration insurance (STLDI), as a substitute for comprehensive health insurance.
The short-term plans, sometimes referred to as “skinny plans,” are typically less expensive than plans in the Affordable Care Act (ACA) marketplace but do not cover as many medical services and can deny coverage to consumers with pre-existing conditions.
The Association for Community Affiliated Plans (ACAP), which represents safety-net health plans, argued that the plans are “junk insurance” and sued, stating the rule violated the ACA and was arbitrary and capricious. But last year U.S. District Judge Richard Leon in the District of Columbia upheld the final rule and ACAP vowed to appeal the decision.
Last week ACAP was dealt another blow when a three-judge panel in a split decision affirmed the ruling that expanded the sales of these short-term plans and extended access to them from three months to 12 months with renewals allowed up to three years. Judge Thomas B. Griffith wrote the decision and was joined by Judge Gregory G. Katsas. Judge Judith W. Rogers dissented.
Although Griffith acknowledged that the STLDI plans offer skimpier coverage and higher deductibles, he wrote that a barebones STLDI policy is better than nothing for those in the Medicaid coverage gap or otherwise unable to afford an ACA compliant plan.
“Boiled down, the dissent’s objection to the STLDI Rule is a prudential one—STLDI plans aren’t good for consumers, so they should be restricted as much as possible. But so long as the Departments have acted within the bounds of their statutorily delegated authority, that policy judgment is theirs to make. When Congress delegates decision-making authority to an agency, it sacrifices control for flexibility. Delegation empowers a comparatively nimbler actor to respond to changed circumstances and unanticipated consequences. Sometimes (perhaps often), the agency will have to make policy tradeoffs in real-world settings that Congress did not imagine. That is exactly what happened here,” Griffith wrote.
Rogers dissented, stating that the Trump Administration rule “flies in the face” of the ACA 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 A. Murray, CEO of ACAP, said the organization was disappointed by the court’s decision but remains firm in its belief that the STLDI plans violate the ACA and the Administrative Procedure Act and will take the case to the full D.C. Circuit.
“Junk insurance is an inferior and hazardous substitute for comprehensive coverage,” she said in a statement. “The court’s decision today protects these plans and their harmful practices, placing patients, families, and providers at increased risk amidst a global health emergency. 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.”
Furthermore, she said, the decision was made days after House Committee on Energy and Commerce released the results of a year-long investigation into dangers of the short-term plans. The report found that enrollment in short-term plans are on the rise but provide consumers with little value. Another concern: Marketing of the plans are often designed to target consumers looking at ACA plans during the annual open enrollment season, notes the Center on Health Insurance Reforms. A July report conducted by The Brookings Institution said that in the absence of new federal legislation, states could take action to protect consumers by limiting the reach of short-term plans either by prohibiting their sale, prohibiting pre-existing discrimination in short-term plans, or limiting them to just three months.
The expansion of the short-term health plans is just one of the ways the Trump administration has tried to chip away at the ACA. Despite the COVID-19 pandemic, the administration is also trying to end the ACA permanently without plans for a replacement. Most recently, the administration filed a legal brief with the Supreme Court stating that the health care reform law became unconstitutional after Congress passed Trump’s tax overhaul in 2017 that eliminated the individual mandate that required individuals to obtain health insurance or pay a penalty.