The Association for Community Affiliated Plans, the American Psychiatric Association and several other groups flies in the face of the intent of the ACA to make low-cost insurance available to Americans and it cannot move forward.
“We’re very concerned that some plans in the ACA market may drop out because this will draw low-risk people out of the marketplace and increase unfair competition from plans that aren’t subject to the same rules,” said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents safety-net insurers.
It’s the latest in a series of lawsuits seeking to reverse Trump administration actions designed to roll back the ACA’s coverage rules and insurance expansion. These include lawsuits to halt the implementation of Medicaid work requirements, stop the expansion of association health plans, preserve contraceptive coverage, and overturn actions denying cost-sharing and risk-corridor payments to insurers.
A CMS spokeswoman said short-term plans “are an important option for people in certain circumstances and the Trump administration is committed to delivering greater access to more affordable choices to the men and women left out by Obamacare.”
The short-term plan rule, finalized last month and taking effect Oct. 2, would allow people to buy “short-term” plans that last up to 364 days and let insurers renew that coverage for up to 36 months.
The plans will have much lower premiums than ACA-compliant plans because they can turn away customers based on pre-existing conditions or charge them more based on age, health status and gender, with no out-of-pocket caps. They do not have to cover the ACA’s 10 essential benefit categories, including mental healthcare, maternity care and prescription drugs.
The healthcare groups alleged that the rule seeks to convert the ACA’s narrow exemption for short-term plans “into a loophole that would permit the creation of a parallel individual insurance market consisting of plans that are not subject to the ACA’s consumer protection standards. This result cannot be reconciled with the text, structure, or purpose of the ACA.”
They claimed the HHS, Department of Labor and Treasury Department offered no well-reasoned justification to overturn the Obama administration’s 2016 rule limiting short-term plans to three months, from the previous 364 days.
The suit also alleged the agencies failed to disclose in their proposed rule that they intended to permit short-term plans to be renewable at all, let alone for a period of up to 36 months.
Abbe Gluck, a health law professor at Yale University who supports the ACA, said the re-interpretation of short-term insurance from plans that cover people for short periods between jobs to coverage that can last for three years and is exempt from ACA rules “is not a reasonable interpretation of the law.”
Several of the plaintiffs in the new suit are mental health groups that say the new short-term plan rule will negatively affect people with mental illness and substance use disorders who need comprehensive insurance that covers behavioral healthcare, which most short-term plans do not offer.
Many insurance leaders and health policy experts see the short-term plan rule as the greatest current threat to the stability of the ACA-regulated individual insurance market because of the risk of short-term plans siphoning away younger and healthier people and driving up premiums in the ACA market.
A Wakely Consulting Group study commissioned by the Association for Community Affiliated Plans projected that up to two million people would switch from ACA plans to short-term plans, hiking premiums by up to 6.6% in the short term.
But Jan Dubauskas, general counsel for HealtheDeals, a division of IHC Group that sells short-term plans, downplayed the impact on the ACA market. She argued that the new, renewable short-term plans mostly would attract consumers who don’t currently have insurance. Still, she acknowledged these plans might draw people with ACA plans whose incomes are too high to receive premium subsidies.
“I don’t think there will be a big impact on those individuals who are in the ACA risk pool now,” she said. “They won’t be interested in walking away from the subsidies they have. If there is any risk to the pool, it’s with those unsubsidized folks who are paying $600 a month with a $6,000 deductible. They may be looking for a more affordable option.”
The new lawsuit highlights that over the past two years, ACA supporters have swapped places with ACA foes in using the courts to fight the Obamacare wars.
“What we saw throughout the Obama administration was dozens of lawsuits filed by right-wing groups trying to eviscerate the ACA,” said Tim Jost, an emeritus law professor at Washington and Lee University who supports the law. “Now things have flipped. There will be a new lawsuit every time the Trump administration does something to undermine the ACA. He keeps saying he’s trying to destroy it. It’s not surprising people are taking him seriously.”