The federal appeals court in D.C. seemed skeptical Friday that the Trump administration had acted unlawfully in expanding the duration of short-term health insurance plans.
“When Congress enacted the ACA, didn’t they adopt the definition of this short-term limited duration rule we effectively have now?” Judge Thomas Griffith of the U.S. Court of Appeals for the D.C. Circuit asked during oral argument, which was conducted remotely via telephone conference due to the risk of spreading the new coronavirus.
The Trump administration in 2018 expanded plans that qualify as short-term from three-month to 12-month plans that can be extended and renewed for up to three years. The Obama administration had shortened the duration of plans to three months in 2016.
Short-term plans allow people to purchase health insurance when they experience a gap in health-care coverage due to circumstances like being out of work. But they aren’t required to offer the same 10 essential benefits required of ACA-covered plans. Those include mental health and substance use treatment, emergency services, and preventative and prenatal care.
Groups challenging the short-term plan expansion say they draw healthy people out of plans that comply with the Affordable Care Act, undermining the stability of the marketplace created by the law.
Judge Gregory Katsas, however, wanted to know why short-term policies aren’t a good alternative to Obamacare for poorer people who may not be able to afford an ACA-compliant plan or qualify for federal assistance.
Short-term plans draw people out of the ACA exchanges, but they also draw a lot of people into insurance who would have been uninsured otherwise, he said.
“It’s a little bit odd to impute to a Congress that wants people to get more insurance rather than less to force those people into the option of nothing,” Katsas said.
The Association for Community Affiliated Plans and the other trade and advocacy groups challenging the short-term plan expansion say the ACA was intended to create a single risk pool for everyone in the individual health insurance market.
But Griffith noted that Congress created several exceptions to that pool.
“I don’t think it’s a fair reading of the ACA to say that it was creating a single risk pool,” he said. “It was certainly trying to create one very large risk pool, but we have at least two other exceptions with fixed indemnity insurance and grandfathered plans. Why not a third?”
In expanding short-term plans, the administration is creating an entirely new form of primary insurance that’s going to be sold in competition with ACA compliant plans, argued Charles Rothfeld, special counsel at Mayer Brown, who represented the challengers.
“It will draw millions of people out of those plans and therefore on the face of it frustrate the essential thrust and purpose of the single risk pool,” he said.
But Griffith still seemed unconvinced the expansion is as damaging as the challengers say it is.
“The rule hasn’t destabilized the exchanges has it?” he asked.
Drawing people out of ACA-compliant plans will drive-up costs by at least 5% and make it harder for people to afford them, Rothfeld said.
“For people who are living on the margin, a 5% increase for an expensive product like health insurance makes a big difference,” he said.
The judges struggled with conducting the proceedings remotely Friday. At one point, Griffith was dropped from the call for over five minutes. When he was able to rejoin, he said he missed what had been discussed during that time.
“I tried to get back in and I was on a permanent mute,” he said. “I’m not on the screen anymore I’m just by the phone. It’s kind of a mess.”
At another point, Judge Judith Rogers’ microphone cut out while she was questioning Daniel Winik, the Justice Department attorney, who argued the case on behalf of the government.
After that issue was resolved, Rogers told Winik that some of the government’s arguments have “considerable strength to them.” But she asked whether Congress actually gave the administration the authority to expand the definition of short-term limited duration insurance plans.
“The departments had to define that phrase,” Winik said. “This isn’t a mouse hole or an elephant. The phrase is left completely undefined by statute and so the departments do have delegated discretion to define it.”
The case is Ass’n for Community Affiliated Plans v. U.S. Dep’t of the Treasury, D.C. Cir., No. 19-05212, oral arguments 3/20/20.