The Trump administration rule finalized in August loosens restrictions on a type of coverage known as short-term medical insurance—low-cost plans that cover a limited period with less-expansive benefit offerings, which are subject to fewer consumer protection regulations. The plans don’t have to cover people with pre-existing conditions, and insurers can charge higher premiums based on a consumer’s health status.
The lawsuit filed by organizations including the American Psychiatric Association and AIDS United argues that the rule runs contrary to the ACA and will harm patients by resulting in higher costs for those with medical conditions.
“The only practical difference between these plans and comprehensive insurance, then, is that they need not comply with the ACA’s protection requirements and can cherry pick healthier consumers—the precise practice prohibited by the ACA,” according to the lawsuit.
The lawsuit was filed against Health and Human Services, the Treasury Department, and the Labor Department, their agency heads, and the Justice Department.
In a statement, HHS spokeswoman Caitlin Oakley said the 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 Justice Department declined to comment. The Treasury Department and Labor Department didn’t immediately respond to requests for comment.
The plan to allow for a proliferation of less robust but cheaper health plans sold on the individual insurance market has been widely expected to siphon off younger, healthier people who now buy coverage on the ACA’s exchanges. Health analysts have said that will cause insurers to raise premiums on the exchanges because younger, healthier consumers are needed to offset the costs of older, sicker, and more expensive individuals.
The result, they have said, will be a two-tiered market for people who buy their own coverage and don’t get it from federal programs or employers —with higher costs for those with pre-existing health issues. They have also said the plans will leave some consumers with huge costs if they develop a medical condition that isn’t covered.
The Trump administration and Republicans, however, have praised the rule as a way to provide relief to people who don’t get subsidies to offset premium costs on the exchanges. Costs have risen sharply for these individuals, and Republicans largely say insurance-coverage requirements imposed by the ACA are to blame.
The lawsuit is the latest in a spate of litigation that seeks to block changes that will weaken the health law.
Lawsuits have also been filed against new requirements in Kentucky and Arkansas that mandate many Medicaid recipients work and participate in community service to retain or get benefits. In July, a dozen attorneys general filed a lawsuit to block the Trump administration from expanding access to a type of association health plan that doesn’t comply with all the ACA consumer protections.
Democratic attorneys general also have intervened in a case from 20 Republican states seeking to have the ACA knocked down entirely. Maryland Attorney General Brian Frosh on Thursday filed a lawsuit in U.S. District Court in Maryland against the Trump administration, saying it is sabotaging the ACA and that the law is constitutional.
“Together with the lawsuit filed by Maryland yesterday, this filing demonstrates that ACA supporters are willing and able to take the same aggressive litigation approach that opponents have taken in the past,” said Timothy Jost, an emeritus professor at Washington and Lee University School of Law. “No act by the Trump administration to undermine the ACA will go unchallenged.”
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