Judge denies challenge to Trump administration's short-term plan expansion

A federal judge ruled against advocates and insurers seeking to overturn the Trump administration's 2018 rule to expand short-term plans. (AndreyPopov/iStock/Getty Images Plus/Getty Images)

A federal judge struck down a lawsuit to curb the Trump administration’s 2018 rule to expand short-term health plans, disagreeing with the lawsuit that the rule violates federal law.

The decision by U.S. District Court Judge Richard Leon on Friday is a setback for patient advocacy and small insurer groups challenging the 2018 rule that expands the duration of a short-term plan from 90 days to one year.

A collection of insurer and patient groups sued the administration in September 2018 claiming that the rule's definition of a short-term plan was arbitrary. Plaintiffs include the American Psychiatric Association, AIDS United and the community-based insurer group Association for Community Affiliated Plans.

Innovation Awards

Submit your nominations for the FierceHealthcare Innovation Awards

The FierceHealthcare Innovation Awards showcases outstanding innovation that is driving improvements and transforming the industry. Our expert panel of judges will determine which companies demonstrate innovative solutions that have the greatest potential to save money, engage patients, or revolutionize the industry. Deadline for submissions is this Friday, October 18th.

The groups’ core argument was that the rule violated the ACA because it created an alternative individual insurance market “beyond the reach of the ACA’s reforms,” according to the opinion issued Friday by Leon.

RELATED: Consumers don't understand short-term plans, study finds

ACA advocacy groups have long claimed that the administration was trying to undermine the ACA's exchanges by trumpeting the plans, which are cheaper than exchange plans because they do not have to cover as many benefits or pre-existing conditions.

These groups argue that healthy people needed to balance out the risk pools will not get coverage on the exchanges and flock to the short-term plans because of the cost. Administration officials such as HHS Secretary Alex Azar, meanwhile, argued that the plans were an escape hatch for people who did not want to buy pricier ACA exchange plans.

Leon, who was appointed by former President George W. Bush, found that the new definition that expanded short-term, limited-duration plans’ length wasn’t inconsistent with federal law. For one thing, Congress did not explicitly define “short-term” or “limited duration” in the law.

He also disagreed with the plaintiffs’ argument that the rule violates the ACA because it competes with ACA-compliant plans.

Leon said that the Congress understood “the reality that not all individual plans can or should be subjected to the ACA’s requirements.” He added that short-term plans were exempted from having to abide by the law’s reforms, as were other types of insurance.

“Congress clearly did not intend for the law to apply to all species of individual health insurance,” the opinion added.

RELATED: State approaches to short-term, association health plans vary, experts say

ACAP CEO Margaret Murray said that the group would appeal the 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,” she said in a statement.

Another lawsuit that is challenging a separate rule that expanded access to association health plans, which are also cheaper than ACA plans, has had more success. A federal judge ruled back in March that the plans were a “magic trick” to avoid the ACA reforms.

Suggested Articles

As drugmakers face billions in legal settlements and judgments, we must keep our eye on what will truly defeat the opioid crisis.

As the public debate on health reform rolls on, a new report analyzes how these different approaches could impact insurers' bottom lines.

A House panel is going to consider several changes to Nancy Pelosi's drug prices plan, including stiff penalties for not being transparent.