UPDATE: July 29, 2019: Seven medical groups on Monday appealed the federal court's decision to allow the Trump administration's expansion of short-term health plans. The case will be heard by the U.S. Court of Appeals for the D.C. Circuit.

Dive Brief:

A district judge ruled in favor of a controversial Trump administration policy expanding the sale of short-term health insurance Friday, advancing conservative efforts to weaken the Affordable Care Act.

Judge Richard Leon of the U.S. District Court for the District of Columbia rejected plaintiffs' claims that the limited coverage unlawfully undermines the ACA, basing his decision partly on the elimination of the individual mandate tax penalty in 2017.

The plaintiffs, including the Association for Community Affiliated Plans, the National Alliance on Mental Illness and AIDS United, plan to appeal the decision, with ACAP CEO Margaret Murray slamming the policy as "arbitrary and capricious" in a statement following the ruling.

Dive Insight:

Originally intended as stopgap coverage while consumers transition between insurance plans, the Obama administration limited short-term health plans to three months. In a rule that took effect Oct. 2, the Trump administration expanded the length of the coverage to 12 months, renewable for up to three years.

Like many other Trump administration healthcare policies, that led to a lawsuit.

The plaintiffs had a hard skeptic in Leon, who seemed unmoved by their arguments in the case in late May. In a position backed up by outside research, the group maintained Trump's expansion of the short-term health plans could lure healthier Americans away from the ACA exchanges, weakening the risk pool and raising premiums across the board.

Legal representation for the administration countered there was consumer demand for insurance more inexpensive than that offered through the ACA marketplace, and that there was no evidence the plans were attracting healthier people away.

"To be sure, the ACA's various reforms are interdependent and were designed to work together as features of the individual exchange markets," Leon wrote in his decision. "However, Congress clearly did not intend for the law to apply to all species of individual health insurance."

It's been a busy week for the judge. Leon is also overseeing the beleaguered CVS-Aetna settlement pact and will hear oral arguments on the merger Friday afternoon.

Despite Republican lawmakers' highly public failure to repeal the ACA in 2017 and GOP attempts to declare the ACA unconstitutional in a case now in front of the Fifth Circuit Court of Appeals, the party is trying to rebrand itself as the party of healthcare going into the 2020 presidential election.

The limited coverage options, often decried as "junk plans" by critics, aren't required to cover the 10 essential health benefits protected under the ACA or to cover pre-existing conditions. They also don't have to pay out at least 80% of premium dollars to fund medical and preventive care.

In March, the House Energy and Commerce Committee launched an investigation into the marketing and business practices of the plans. Leading Democrats, led by Frank Pallone, D-N.J., requested documents and information from 12 companies that either sell, market or help consumers in purchasing the limited coverage, including market giants Anthem and UnitedHealth Group.

In many cases, consumers may not be aware they're being peddled bare-bones coverage. Tampa, Florida-based Health Insurance Innovations is currently being sued by two policyholders that were left with tens of thousands of dollars in medical bills for care they thought was covered under their short-term plans.

Other attempts by the Trump administration to undermine the ACA have hit legal roadblocks.

In March, another federal judge struck down its attempt to allow small businesses to join together to create association health plans exempt from ACA rules, slamming it as an "end run" around the law.

The same month, another judge rejected Medicaid work requirements in Kentucky and Arkansas requiring low-income Americans to meet stringent work or education benchmarks to receive coverage under the program.

Shares of companies that sell short-term plans, including Health Insurance Innovations, spiked following news of the decision Friday.