Judge Looks Unlikely to Nix Rule for Short-Term Health Plans

WASHINGTON (CN) – A federal judge appeared skeptical Tuesday of arguments from a collection of advocacy groups and health insurance providers trying to strike down a Trump administration rule easing restrictions on short-term insurance plans that do not need to meet the requirements of the Affordable Care Act.

In this Oct. 31, 2018, file photo, the HealthCare.gov website is photographed in Washington. (AP Photo/Pablo Martinez Monsivais, File)

The Trump administration in August issued a rule that changed how these short-term insurance plans operate, allowing the plans to run for up to 364 days and allowing people to renew them for as long as three years. The rule reversed an Obama-era regulation that required the plans to be less than three months in length. 

These short-term plans, originally intended to cover people as they transition between coverage, are not subject to the regulations of the Affordable Care Act. For example, unlike plans purchased through the ACA’s individuals markets, the short-term plans do not need to meet the law’s minimum coverage requirements.

A collection of insurance providers, advocacy groups and medical associations sued in September, claiming the new rule was effectively a way around the ACA. With the option to get coverage that spans one day short of a year, the groups said, young and healthy people would opt to buy the short-term plans rather than ACA-compliant plans, with potentially disastrous consequences on the ACA marketplaces.  

Both the Trump administration and the groups that brought the suit in Washington, D.C., have asked U.S. District Judge Richard Leon to rule in their favor, but the groups appeared to face an uphill battle in convincing him to do so during oral arguments Tuesday.

Leon nodded along when an attorney for the federal government explained that before the Obama administration altered the rules for short-term plans in 2016, the plans could run for almost a year and be renewed indefinitely.

“It’s just a return to the status quo,” Leon said. 

Charles Rothfeld, an attorney with the firm Mayer Brown who argued for the groups challenging the Trump administration’s change, said the move effectively allows people to “opt out” of the ACA marketplace. This has cost one of his clients, the Association for Community Affiliated Plans, roughly 100,000 customers since the rule took effect, Rothfeld said.

He argued Congress never could have intended these plans to run for nearly a year when it first created them. After all, Rothfeld said, if the average length of arguments before Leon is an hour, nobody would describe his arguments as short if he were to spend 59 minutes and 55 seconds at the podium.

Leon was skeptical, however, of Rothfeld’s claims about the impact the rule would have on the market for ACA-compliant plans, at one point wondering whether the groups should wait for a year or two to collect better evidence to support their arguments.

The George W. Bush appointee also wondered whether people who drop ACA-compliant plans in favor of the short-term offerings to save money would simply go without insurance rather than stay in the ACA market, especially given the recent demise of the requirement that most people purchase health insurance.

“Isn’t it better that these people have some option rather than no option?” Leon said.

Serena Orloff, who argued for the Trump administration, said Rothfeld was overstating the impact of the administration’s rule. She noted most people who are on the ACA exchange markets receive subsidies that cannot go towards the short-term plans, making them less likely to switch.

She also said Congress did not address the short-term plans when it passed the ACA in 2010, an implicit endorsement of the regulatory scheme in place at the time.

Orloff argued the case is a “quintessential policy dispute” that courts should not resolve. Instead, she said, the groups can petition Congress to change the law if they believe such action is necessary.

Leon said he hopes to issue a ruling in the case by the summer.

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