The Obama administration has overreached its legal authority insetting strict standards for health insurance plans, a federalappeals court ruled last week.

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The court struck down a rule that limited to whom insurers couldsell “fixed indemnity” insurance plans, which give policyholderspre-determined lump sums to pay for certain medical expenses, suchas a night in a hospital or a visit to a specialist, regardless ofhow much the provider charges.

A fixed indemnity plan turns a conventional insurance plan onits head, since it is the consumer, rather than the insurer, thatis responsible for all expenses beyond a pre-set copay for certainmedical services.

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Although the rule issued by the administration in 2014, duringthe first year of the implementation of the Affordable Care Act,did not bar such policies entirely, it restricted sales of suchplans to those who already had a conventional health plan. Thosewho lacked one could not buy a fixed indemnity plan as asubstitute.

The Department of Health and Human Services was not authorizedby any legislation to take such a dramatic step, the U.S. Court ofAppeals for the District of Columbia Circuit said in its ruling.The ACA, it noted, did not make any mention of fixed indemnityplans.

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“Disagreeing with Congress’s expressly codified policy choicesisn’t a luxury administrative agencies enjoy,” said thedecision.

Those who sell fixed indemnity policies sued the administrationover the rule. While their arguments to the court were based inlaw, their case to the public is economic and moral, arguing thatfixed indemnity plans help the poor.

“Even after the Affordable Care Act, lower-income consumers maynot be able to afford major medical coverage,” Quin Sorenson, anattorney for the plaintiffs, told The New York Times.

A brief submitted by 11 Republican state attorneys general alsopraised fixed indemnity plans as expanding health care to thepoor.