In yet another legal blow to the Trump Administration’s healthcare policy priorities, a federal judge in Washington, D.C. struck down efforts to expand access to association health plans.
U.S. District Judge John Bates invalidated a rule by the U.S. Department of Labor which allowed individuals or businesses to band together and buy healthcare coverage through so-called association health plans (AHP), calling the policy an “end-run” around the patient protections and regulations established with the passage of the Affordable Care Act.
The decision comes the same week that another Washington, D.C. federal judge struck down Medicaid work requirements in Kentucky and Arkansas, which were a part of an effort to rein in spending after Obamacare’s Medicaid expansion provisions.
In the wake of the legislative failure to repeal the ACA, the Trump Administration has taken executive action to undermine Obamacare by expanding the entities who could join association health plans.
A U.S. Department of Labor rule made it so that associations could be formed for the sole purpose of creating health plans and opened up the ability of self-employed individuals to join associations by considering them both employers and employees.
The idea behind association health plans was to create cheaper coverage options for small businesses that could increase access to healthcare services by allowing them to skirt certain Obamacare requirements.
While association health plans pre-date the ACA, they were previously limited to groups with close economic and representational ties. Associations are allowed to base premiums on factors such as gender, age and industry which are largely prohibited in ACA-regulated marketplaces.
Critics of the plans say they have the potential to take healthier, younger members from ACA-regulated marketplaces, leaving health plans with older and sicker members and higher premiums. An analysis from healthcare consulting firm Avalere estimated that 3.2 million people would shift from ACA individual and small group markets into AHPs by 2022
Conflict over the association health plan expansion led to a suit brought by a coalition of attorneys general who challenged the policy on the grounds that it violated the ACA and the Employee Retirement Income Security Act (ERISA).
“The Final Rule is clearly an end-run around the ACA,” Judge Bates wrote in his decision. “Indeed, as the President directed, and the Secretary of Labor confirmed, the final rule was designed to expand access to AHPs in order to avoid the most stringent requirements of the ACA.”
He went on to write that the rule “does violence to ERISA” by deconstructing the law’s focus on employee benefit plans arising from actual employment relationships.
The Trump Administration is expected to appeal the ruling and many proponents of AHPs say they will continue to move forward with efforts to launch their plans, which are set to start in 2020.
“Thousands of employees and family members within the small business community have already enrolled in association health plans – which help lower health care costs – since they first became available last fall. They have provided a means by which broad benefits may be accessed at more economical prices,” AssociationHealthPlans.com President Kevin Coleman said in a statement.
“While I do not believe today’s ruling will survive appeal, I believe Judge Bates’ decision is an unnecessary detour on small businesses’ path toward more affordable health coverage.”
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