Chevron1 remains a pillar of administrative law, but it is beginning to crumble.2 While lower courts continue to uphold agencies’ statutory interpretations that reasonably construe ambiguous provisions,3 the Supreme Court has called into question Chevron’s continued relevance.4 Recently, in Ass’n for Community Affiliated Plans v. U.S. Department of the Treasury5 (ACAP), the D.C. Circuit added to this landscape, upholding an agency rule that expanded the availability of “short-term limited duration insurance” (STLDI) plans, which are exempt from the requirements of the Affordable Care Act6 (ACA).7 While the D.C. Circuit’s decision to grant Chevron deference was not surprising, ACAP may signal a growing trend of cases where the values underlying Chevron actually counsel against such deference.
Since the 1990s, federal law has exempted “short-term limited duration insurance” from most federal health insurance regulations.8 When Congress passed the ACA in 2010, it incorporated this exemption from the Health Insurance Portability and Accountability Act of 19969 (HIPAA), leaving STLDI policies outside the bounds of the ACA’s key reforms.10 But in enacting HIPAA, Congress did not provide an independent definition for “STLDI”; the first such definition came in 2004 from the Departments of Treasury, Labor, and Health and Human Services (Departments).11 Years later, concerned that cheaper STLDI plans were drawing younger and healthier individuals out of the risk pool for ACA-compliant coverage — and causing premiums to rise — the Departments in 2016 revised their definition of STLDI to cover only plans lasting less than three months.12
Days after the 2016 rule was finalized, Donald Trump was elected President.13 He soon issued two executive orders on the Affordable Care Act: the first sought “the prompt repeal” of the statute;14 the second, after Congress did not act, highlighted STLDI’s exemption “from the onerous and expensive” requirements of the ACA and directed the Departments to consider proposing regulations “to expand the availability of STLDI.”15 The Departments issued a new rule, redefining STLDI to include all plans lasting less than twelve months.16
Shortly before the rule took effect, a group of insurance and medical service providers and purchasers17 filed suit against the Departments.18 Both sides moved for summary judgment, and the district court granted the Departments’ motion.19 First, the court held that the plaintiffs had competitor standing because, as private insurers selling plans on government exchanges, they competed with STLDI plan providers.20 Second, the court considered the Departments’ rule on the merits under the Chevron framework, asking first whether the statutory language was ambiguous21 and, second, whether the agency’s interpretation was a “permissible construction of the statute.”22 The court deemed both inquiries satisfied. Congress could have defined “short-term limited duration insurance” but did not23 — leaving the phrase ambiguous.24 The Departments’ definition of STLDI was permissible;25 nothing in HIPAA or the ACA rendered their construction unreasonable.26
The D.C. Circuit affirmed.27 Writing for the panel, Judge Griffith28 first addressed whether the rule was consistent with federal law; namely, HIPAA’s plain text and the ACA’s structure and purpose. Under Chevron, the panel first identified ambiguity in the phrases “short-term”29 and “limited duration,”30 then accepted the Departments’ interpretation as a permissible construction of those phrases.31 Further, the court denied that the rule conflicted with the “spirit” of the ACA.32 Congress itself had created the STLDI exception, “bak[ing]” it “into the statute itself.”33 And for over a decade, the Departments had defined the term “almost exactly as they do today.”34 They did not, as the plaintiffs asserted, squeeze a “regulatory elephant” into a “statutory mousehole.”35 The panel also rejected the claim that the Departments’ rule would undermine the exchanges and thereby frustrate a key reform of the ACA.36 Consequently, under Chevron, the D.C. Circuit found no conflict between the rule and the statutes that the Departments sought to apply.37
Judge Griffith concluded by turning to the dissent. Characterizing the dissent’s objection to the Departments’ rule as a “prudential one,” Judge Griffith emphasized the “narrow” role of judges, who could “ensure only that the Departments reasonably exercised the policymaking authority granted to them and not to [the judiciary].”38 Congress could “take back the reins” and a new President could “revisit the Departments’ choice,” but the D.C. Circuit could do neither.39
Judge Rogers dissented.40 She began by describing how Congress had enacted the ACA as a “comprehensive statutory scheme” with “interlocking reforms” designed to address longstanding issues of coverage, fair access, and affordability.41 Even under Chevron’s deferential framework, Judge Rogers argued that the ACA’s structure rendered impermissible the new definition of “short-term limited duration insurance” for several reasons.42 First, the rule encourages the use of plans that ultimately provide less than the minimum coverage required under the ACA.43 Second, the STLDI plans undermine the ACA’s commitments to fair access — expressed primarily through its “guaranteed issue” and “community rating” requirements.44 Finally, the rule draws away younger, healthier individuals, fracturing the “single risk pool” at the heart of the ACA and ultimately compromising the affordability of ACA-compliant insurance.45 Where Congress in 2010 had understood STLDI as a “limited exemption[]” meant “to fill temporary gaps in coverage,”46 the Departments in 2018 held them out as a full-blown alternative meant to compete with ACA-compliant plans.47 Judge Rogers concluded by rejecting the majority’s “attempts to defend the Rule as consistent with the ACA.”48
Both the majority and the dissent applied Chevron Step Two to the Departments’ rule, focusing on whether the agencies had reasonably interpreted “short-term, limited duration insurance” as it appears in the Affordable Care Act. While hardly noteworthy on its own, the move suggests a commitment to the Chevron framework that may not withstand closer scrutiny. When agency interpretations subvert, rather than promote, broader democratic values — as the Departments did here — the justifications underlying the Chevron framework dwindle. Political accountability, for example, is compromised. So too is agency expertise. Even the legal fiction about congressional intent on which Chevron rests seems to collapse. The D.C. Circuit’s reflexive application49 of Chevron therefore highlights a tension between the doctrine and the values it purports to protect.
Underlying the Chevron framework is the presumption that administrative agencies are healthy institutions that respect “basic norms of good governance.”50 Unlike courts, agencies may “updat[e]” statutes to fit changing circumstances,51 but they cannot, say, rewrite or sabotage statutes themselves.52 When agencies abuse their authority — and fail to exercise their delegated authority in a “democratically reasonable fashion”53 — the justifications for Chevron fade.54 The facts of this case suggest the Departments were concerned less with “fill[ing] up the details”55 of the Affordable Care Act than with hollowing out its reach.56 By expanding the criteria through which insurance plans could qualify as STLDI, the Departments’ rule fashioned the limited exception into a “long-term form of primary insurance coverage”57 far beyond the scope of what Congress had originally intended.58 Therefore, ACAP may be a case where the values behind Chevron deference would have been better served by declining to apply the Chevron framework and engaging in de novo statutory review.
One justification for the Chevron framework is political accountability: while neither federal judges nor agency heads are democratically elected, the latter make policy choices under the direction of the President, who is elected and held accountable for those decisions.59 But the Departments’ own rationale for their new STLDI rule undercuts this argument. Oversight by the President “endow[s] agencies with a degree of democratic legitimacy” that courts do not enjoy.60 That presumption of legitimacy, however, is compromised when agencies act in bad faith, not just misconstruing Congress’s legislative intent but deliberately subverting its legislative “plan.”61 Congress had such a plan with the Affordable Care Act, writing into the statute itself its aims to “achieve[] near-universal coverage” by “increasing health insurance coverage,” “minimiz[ing] . . . adverse selection,” and “broaden[ing] the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.”62 As the Departments recognized in their 2016 rule, Congress understood STLDI as a placeholder “to fill temporary gaps” in coverage when transitioning from one job to another.63 Presenting STLDI as an “affordable alternative” to ACA-compliant insurance, as the Departments did with their new rule, clashes with that understanding and with Congress’s express goals.64 That Congress enacted as comprehensive a statutory scheme as it did suggests it was not interested in creating a broad exception to that scheme. But by deferring to the Departments’ interpretation, the D.C. Circuit seemed to punish Congress for not being express enough. Where an agency interpretation exploits ambiguity to disable legislation enacted by 535 elected members of Congress, political accountability fails to justify the Chevron framework.
Another justification for Chevron rests on expertise: agency interpretations merit deference because agencies have more technical expertise.65 Chevron presumes that agency statutory interpretation is grounded in expert judgment, not purely in politics.66 But the context in which the new STLDI rule emerged suggests little reliance on expertise. When “partisanship and politicization seep into agency deliberations, we might question the extent to which a given interpretation reflects an informed and considered judgment.”67 Here, the Departments seemed to rely less on expertise and more on an observation from the President that STLDI presented “an appealing and affordable alternative to government-run exchanges.”68 Some policies were not even included in the Departments’ proposed rule, leaving stakeholders without an opportunity for comment.69 What prompted the Departments to act, it seems, was not their shared knowledge of health insurance policy, informed by outside opinion, but rather the White House’s concern with the “onerous and expensive insurance mandates and regulations” of the Affordable Care Act.70 Some scholars have noted an anxiety within the Supreme Court over unchecked executive power “at work in the form of political interference with agency expertise.”71 It appears that something similar happened here. The value of expertise that underlies the Chevron framework was not served by applying Chevron in this case.
Some would argue ACAP presents precisely the kind of case that Chevron deference is meant to resolve.72 Perhaps the D.C. Circuit was right to consider the reasonableness of the Departments’ interpretation at Chevron Step Two, or it might have asked at Step One whether the statute’s purpose renders the phrase “short-term limited-duration” unambiguous. But the entire framework for deference seems inappropriate when the Departments have acted in bad faith. The Departments not only stretch the duration of short-term insurance plans beyond what Congress intended, but also provide instructions on how to extend those plans indefinitely without triggering federal enforcement. Nothing prohibits insurance providers, the Departments note, from “offering a new short-term, limited-duration insurance policy to consumers who have previously purchased this type of coverage, or otherwise prevent[ing] consumers from stringing together coverage under separate policies . . . .”73 Under these circumstances, “it may be possible for a consumer to maintain coverage . . . for extended periods of time.”74 The Departments even disclaim their authority to keep individuals or issuers from exploiting these loopholes.75 To preserve loopholes is one thing; to encourage their exploitation is another, cutting against notions of both political accountability and agency expertise. In applying the Chevron framework, the D.C. Circuit seemed to gloss over concerns about how these agencies had exercised their authority.76
The Departments’ new rule is not the first effort to undermine the Affordable Care Act, nor will it be the last.77 In 2017, for example, Congress lowered the ACA’s “shared responsibility payment” to zero dollars,78 effectively reducing the Act’s individual mandate to an “ineffectual, advisory statement.”79 Whereas that move involved Congress amending its own law, the STLDI rule reveals a not-so-veiled attempt by the executive branch to undermine a law from within. At issue in this case was not that the Affordable Care Act was weakened but how it was done. In responding to instances of political dysfunction, few courts have questioned whether the Chevron framework is appropriate.80 Association for Community Affiliated Plans demonstrates the pitfalls of this reflexive application of that framework.