Obamacare Can’t Restrict Sale of Fixed-Payout Health Plans, Judge Says

A federal judge sided Friday with an insurance company that says the Obama administration had no right to restrict the sale of its products to people who also hold medical insurance that complies with Obamacare’s standards.

The plaintiff, Central United Life, said a significant portion of its revenue is derived from the sale of fixed indemnity plans, which pay out a specific cash amount when a beneficiary receives a health service, regardless of what the hospital or other provider charges.

In his ruling, U.S. District Court Judge Royce C. Lamberth said the administration went too far in interpreting the Affordable Care Act to mean they could require insurers, through rule making, to only sell fixed indemnity plans to people who attested they also had substantial, Obamacare-compliant insurance.

The administration passed the rule, effective last January, to fulfill Obamacare’s core mission of making sure people are adequately covered when they’re injured or get sick. It also didn’t want people to buy these supplemental plans and think it shielded them from Obamacare’s individual mandate penalty for lacking substantive coverage.