The White House suffered a setback in its efforts to strengthen the individual insurance market when a federal appeals court last week struck down an HHS rule barring the sale of certain limited-benefit plans as stand-alone products
In Central United Life v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit overturned a 2014 HHS rule restricting the sale of fixed-indemnity insurance plans that pay policyholders fixed dollar amounts to cover medical services regardless of how much the provider bills. These plans, which are cheaper to buy than comprehensive plans but don’t cover pre-existing conditions, and do not meet minimum essential coverage and guaranteed-issue requirements of the Affordable Care Act.
HHS had allowed the sale of such indemnity plans only to people who also had plans that complied with the ACA’s minimum essential coverage standard. It also had mandated that insurers fully inform consumers that these plans were not a substitute for comprehensive coverage and could leave them exposed to the ACA’s tax penalty for being uninsured.
A federal judge last year blocked the minimum essential benefits requirement, and the appellate panel affirmed that ruling (PDF) Friday, calling the HHS rule “administrative overreach.”
Authorities estimate that up to 4 million people have these fixed-indemnity policies without accompanying comprehensive coverage.
The White House and some insurance industry officials are worried about the sale of these plans because they offer less coverage than ACA-compliant plans- and may be drawing younger healthier consumers out of the ACA insurance pool.
HHS has already proposed rules to restrict short-term health plans, which can be chosen to cover in-between job situations, just out of school- before obtaining employer-provided coverage situations, and also retiring just before Medicare-eligibility situations too. Under the rule, short-term plans could only be offered for less than three months and could not be renewed.
“By keeping these consumers out of the ACA single-risk pool, such abuses of limited-duration coverage increase costs for everyone else, and they could have a greater impact over time if allowed to become more widespread,” HHS said in a written statement when it issued the proposed rule. Source: Modern Healthcare
