A federal judge on Thursday rejected the Trump administration's attempts to expand access to association health plan rules.
U.S. District Judge John Bates in Washington said the administration's final rule allowing associations and employers to band together to create AHPs goes beyond its authority under the Employee Retirement Income Security Act (ERISA).
Under the Department of Labor's final rule, employers can form associations solely for the purpose of creating these health plans, which don't have to follow many Affordable Care Act market rules. Insurance experts warned they would siphon younger and healthier groups and individuals out of the ACA-regulated market, driving up rates.
"The final rule was intended and designed to end run the requirements of the ACA, but it does so only by ignoring the language and purpose of both ERISA and the ACA," the judge wrote.
The Department of Labor expanded access to AHPs through an ERISA regulatory change. The agency has authority over group insurance regulation through that law. The judge said this change ran counter to "Congress's clear intent that ERISA cover benefits arising out of employment relationships."
The Trump administration will likely appeal the judge's decision, said Christopher Condeluci, a health policy consultant who has worked with business groups to launch AHPs. He doesn't think the ruling will stop those groups from moving forward with the plans they have established, which are set to start on Jan. 1, 2020.
"These organizations want to offer comprehensive health coverage at a reasonable cost to their members," Condeluci said. "And the AHP regulations allow them to do this. The status quo does not."
During oral arguments in January, Judge Bates homed in on the Trump administration's intent, noting it seemed like a dispute between the executive branch and Congress. He frequently invoked the paper trail of ACA criticism from President Donald Trump and his top deputies as clear intent that the rule was meant to change the ACA insurance markets.
In the ruling, Judge Bates called the Labor Department's logic for how ERISA law can allow an association to be formed out of two working owners without employees as a "magic trick." He also said the "unreasonable interpretation of ERISA creates absurd results" under Obamacare.
The judge asked the department to decide whether any part of the final rule could still stand now that he has struck down the definition of employer and employee that serves as its foundation.
The plaintiff states led by New York and the federal government had asked Bates for a speedy decision, and Justice Department attorneys noted that association health plans have already formed.
Labor Secretary Alexander Acosta in January touted the roughly 30 AHPs that have formed since the administration finalized its rule. He highlighted the Las Vegas Metro Chamber of Commerce AHP comprising 500 employers and 100 sole proprietors.
