In a victory for the Trump Administration, on July 18, 2019, the United States District Court for the District of Columbia upheld a 2018 regulation designed to expand the sale of short-term, limited duration insurance policies and rejected claims that the regulation unlawfully undermined the Affordable Care Act (“ACA”) and would destabilize the ACA marketplaces. Plaintiffs have indicated that they will appeal the decision.
Short-term, limited duration insurance policies are not required to comply with ACA protections, including those relating to essential health benefits like maternity care and prescription drugs. Originally designed to fill very short gaps in coverage, these types of plans were not included in the definition of individual health insurance under the ACA. These short term policies can be designed with high out-of-pocket maximums, low coverage caps, and significant benefit gaps. They can also deny coverage to those with pre-existing conditions. For these reasons, these policies can be marketed at a lower cost. Plaintiffs representing insurers, providers, and consumer groups sued the administration arguing that the availability of short term plans would draw away younger and healthier individuals from risk pools and put insurers at an unfair disadvantage by forcing them to compete with short term plans that would not be required to comply with the same ACA protections.
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