Insurers Defeat Obamacare Provision

     WASHINGTON (CN) – A federal judge on Friday threw out a provision of the U.S. health care reform law that blocks the sale of fixed-indemnity insurance plans.
     Fixed-indemnity insurance plans pay a fixed rate for certain injuries and illnesses, rather than the varied rate more traditional plans pay depending on the severity of an injury.
     As of Jan. 1, the Department of Health and Human Services has determined that fixed-indemnity insurance plans alone do not meet the requirements of the Patient Protection and Affordable Care Act for health insurance.
     Companies faced up to $100 per day in penalties for selling plans to people without other health insurance coverage that meets the Affordable Care Act’s minimum requirements.
     Central United Life Insurance Co. and Senior Security Benefits Inc. filed suit against HHS, claiming that restrictions on the supplemental plans are unconstitutional and arbitrary.
     The government countered, however, the companies could not challenge the rule because it did not hurt them any more than the original rule governing fixed indemnity plans.
     Health and Human Services said the prior rule allowed fixed-indemnity plans, only if insurance companies paid the benefits on a per period basis, but the insurers claimed that they had no such flexibility under the old rule.
     U.S. District Judge Royce Lamberth sided with the insurers today, calling the government’s reasoning “counterintuitive.”
     He said it provided “a recipe for eluding judicial review” in which an agency could issue a rule that puts companies out of business, not enforce it to avoid any challenges and then replace the rule with a new one that still keeps companies out of business.
     “But defendants are wrong, and the government cannot strip a litigant of standing by chaining one harm to another in an Escheresque loop,” Lamberth wrote.
     The government also claimed Congress’ intentionally left the definition of “fixed indemnity insurance” ambiguous, and that its interpretation that Congress meant to require other coverage to go along with the plans just “fills the gap” Congress left.
     But the companies say the definition of the plans in the Affordable Care Act is clear, and that the government has no room to reinterpret it to force people to have additional coverage.
     Lamberth again sided with the companies, saying the government cannot tack a foreign concept like minimum-acceptable coverage onto the definition of fixed-indemnity insurance.
     “For example, imagine a statue which regulates clothing but not ‘hats,'” Lamberth wrote. “While the word ‘hats’ is ambiguous insofar as it does not, by itself explore the full range of qualifying headgear… it unambiguously does not mean ‘table’ or ‘horse.’ It also does not mean ‘hats, but only those hats sold to people who already own shoes.'”
     The government tried to stave off an injunction in the name of the public interest, saying it would let the companies issue harmful insurance plans.
     Lamberth meanwhile noted that it is unclear whether the policies are harmful, or that this harm is worth allowing a federal agency to break the law.
     “Forcing federal agencies to comply with the law is undoubtedly in the public interest, and defendants have not show to the Court’s satisfaction that this clear benefit would be outweighed by the harms putatively caused by plaintiffs’ policies,” Lamberth wrote. “For these same reasons, plaintiffs have shown that the balance of equities favors them.”

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