Health plan ruling a victory for Trump
The Trump administration can expand the sale of short-term health insurance policies that don’t meet the standards of the Affordable Care Act, a federal judge ruled, advancing the government’s efforts to undo Obamacare.
U.S. District Judge Richard Leon in Washington rejected challengers’ claims that policies sold under a government regulation unlawfully undermine the ACA, passed by Congress in 2010 to make comprehensive coverage more widely available regardless of a consumer’s pre-existing health conditions.
“Not only is any potential negative impact” from the rule “minimal, but its benefits are undeniable,” Leon wrote in a 40-page ruling. He said there’s no evidence the rule “is having or will have the type of impact — substantial exodus from the individual market exchanges — that would threaten the ACA’s structural core.”
Shares of companies that sell short-term health policies, including Health Insurance Innovations Inc. and eHealth Inc., jumped on news of the decision.
The ruling allows insurers to offer far cheaper plans to healthy people, freed from the ACA’s protections for those with preexisting conditions as well as from its other requirements. That could lead to higher premiums for people in ACA-compliant plans by siphoning off healthier consumers from the ACA risk pool over time — and potentially to a political headache for Republicans on an issue that fueled the Democratic takeover of the House last year.
The judge based his ruling partly on the elimination of the individual-mandate tax penalty in the GOP’s 2017 tax law. Some Republican senators have since said they didn’t intend their vote to undermine protections for people with preexisting conditions.
Susan Collins of Maine was the only Republican to vote for a Democratic resolution opposing the shortterm plan regulation in October.
“It is essential that individuals who suffer from preexisting conditions are covered,” she said then.
Two years after Sen. John McCain gave the thumbsdown to his Republican colleagues’ effort to repeal the ACA, the court case underscores the quickening tempo of the fight over President Barack Obama’s signature legislative achievement.
In March, another federal judge in Washington rejected the administration’s attempt to permit small businesses to band together to offer “association health plans” exempt from ACA rules, calling it “an end run around the ACA.” The same month, a third judge struck down administrationbacked policies in Kentucky and Arkansas that required many people on Medicaid to work in order to maintain their eligibility for the health program for the poor.
Meanwhile, a federal appeals court is weighing a request to overrule a Texas judge’s decision late last year to strike down the ACA in its entirety, a move supported by the Justice Department.
The initiative to expand short-term coverage arose in 2017 after the Senate failed in its push for ACA repeal. In an executive order, President Donald Trump called for expanding access to short-term coverage, describing those policies as exempt from the ACA’s “onerous and expensive insurance mandates and regulations.”
Unlike Obamacare plans, the short-term policies don’t have to cover a standard set of essential benefits and can be substantially cheaper. They also don’t have to pay out a minimum of 80 percent of the premiums they collect on medical care, an ACA rule that applies to other health insurance. Companies offering the plans can refuse to insure people with preexisting medical conditions.
At the end of 2017, about 122,000 Americans were enrolled in short-term medical plans, according to data from the National Association of Insurance Commissioners. Federal actuaries estimate that 600,000 more people might purchase short-term coverage in 2019 because of the rule.
House Democrats have derided short-term plans as “junk” insurance. The House Energy and Commerce Committee in March announced an investigation into 12 companies selling short-term policies.