This week, the Cato Institute, the Buckeye Institute, and I filed an amicus curiae brief in the case Association for Community Affiliated Plans v. Treasury. The plaintiffs in the case are challenging the Trump administration’s August 2, 2018 final rule that allows greater consumer protections in short‐term limited duration insurance (STLDI) plans. On July 19, 2019, The U.S. District Court for the District of Columbia ruled against the plaintiffs. The plaintiffs have appealed the district‐court ruling to the U.S. Court of Appeals for the D.C. Circuit. Oral arguments will take place March 20, 2020.
Congress has exempted STLDI from the statutory requirements otherwise applicable to individual health insurance plans. Since Congress has never defined the term or duration of STLDI, the Departments of Health and Human Services, Labor, and Treasury have filled that gap. Since 1997, with limited exception, these agencies have consistently defined STLDI as having, among other things, an expiration date that is “within 12 months of the date the contract becomes effective.”
The sole exception occurred between December 30, 2016 and 2018, when the Departments limited the maximum term to less than three months. As the National Association of Insurance Commissioners warned in 2016, that cramped three‐month limit would strip health insurance coverage from consumers after they fell ill, leaving them with a period of up to a year during which they faced expensive medical bills with no health insurance coverage.
That’s exactly what happened to 61‐year‐old Arizona resident Jeanne Balvin, who found Affordable Care Act (ACA) coverage unaffordable and instead purchased an STLDI plan for one third of the cost of an ACA plan. Balvin’s STLDI plan provided excellent coverage for her emergency surgery and hospitalization; she paid far less than she would have with an ACA plan. But then, the three‐month limit cancelled her STLDI plan, thereby stripping her of coverage that could have and would have covered two subsequent hospitalizations. The three‐month limit left Balvin uninsured with a preexisting condition and $97,000 in unpaid medical bills.
In 2018, the Departments rescinded the three‐month limit and reverted to the prior 12‐month limit. The Departments also allowed STLDI issuers to renew the initial contract up to a total of 36 months and to offer renewal guarantees that would allow enrollees to keep purchasing STLDI plans at healthy‐person premiums, even after they get sick.
The plaintiffs in ACAP v. Treasury are primarily private insurance companies who sell ACA‐compliant plans. They are asking the courts to reinstate the three‐month limit because they fear that otherwise, their customers would find STLDI plans more attractive than their ACA‐compliant plans. I am not making this up. They are literally asking the court to reinstate the three‐month limit and inflict real harm on patients like Jeanne Balvin in order to pad their bottom lines.
The Cato Institute, the Buckeye Institute, and I support the district court’s proper decision that the Departments acted within the scope of their statutory authority in reinstating the 12‐month maximum term for STLDI plans.
For more information, read:
- My comments on the proposed STLDI rule;
- My Washington Examiner oped on how the STLDI final rule made ObamaCare optional;
- My blog post on how the STLDI rule flips the political narrative on health insurance;
- My blog post on how the STLDI final rule will increase coverage, protect conscience rights, and improve ObamaCare’s risk pools;
- My Wall Street Journal oped on Democrats’ attempts to reinstate the three‐month limit; and
- The Cato‐Buckeye‐Cannon amicus brief.