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Analysis

Association Health Plans Ruling Appealed as Lawsuit Over Short-Term Plans Proceeds

By Steven Porter  
   April 30, 2019

Two initiatives touted by the Trump administration as beneficial ways to expand access to more-affordable health insurance are facing legal challenges.

After a federal judge blocked key provisions of the Trump administration's association health plans (AHP) rule late last month, saying they were part of an unlawful effort to bypass the Affordable Care Act, the government has filed an appeal to the D.C. Circuit Court.

The administration's effort to defend its rulemaking on AHPs comes as it also defends its rulemaking on short-term limited-duration (STLD) health plans in a separate lawsuit. The two rules were introduced last year as side-by-side prongs in the administration's push to expand access to cheaper insurance despite the ACA—a push that some have warned could undermine the markets established by the Obama-era law.

But proponents of the AHPs rule cheered the administration's move as beneficial for small businesses.

"This appeal is welcomed by associations across the country who have invested their time, money and reputation to launch health plans under the 2018 regulation," said Kev Coleman, president and founder of AssociationHealthPlans.com, in a statement. 

"This regulation marked a watershed in health policy inasmuch as it corrected a basic unfairness existing in health coverage costs between small companies and large companies. Prior to the regulation, small businesses faced the prospect of paying more than large companies for the same health benefits," Coleman added. "The new regulation made it easier for small businesses and sole proprietors to band together and access the lower-cost large company health insurance market that already provides coverage to roughly 96 million Americans."

In his ruling late last month, U.S. District Judge John D. Bates in the D.C. District Court said the AHPs rule had unreasonably expanded the legal definition of "employer" and "employee."

Republicans in the House of Representatives have introduced legislation to amend the law to accommodate the effort to expand AHPs.

The lawsuit challenging the AHPs rule was brought last July by New York and 10 other states, plus the District of Columbia. The separate lawsuit challenging the STLD insurance rule was brought last September by seven groups, led by the Association for Community Affiliated Plans (ACAP), also in the D.C. District Court but before U.S. District Judge Richard J. Leon.

In addition to the lawsuit, the STLD rule also faces a potential legislative threat. Democrats in the House of Representatives have introduced legislation to nullify the rule.

That legislation would decrease the deficit by $8.9 billion over 10 years, primarily through lower premium subsidies for nongroup insurance, according to analysis by the Congressional Budget Office.

ACAP CEO Margaret A. Murray said the CBO analysis shows that short-term plans undermine the ACA's existing marketplace. Murray noted also that CBO's score shows that about one-third of the 1.5 million people who would be blocked from a short-term plan would wind up uninsured altogether.

"We can't take that lightly—it highlights the need to take on the challenges surrounding affordability," she said in a statement. "But merely paring back coverage and allowing the most insidious features of the individual market to return—such as exclusions based on pre-existing conditions and the practice of recission—is no solution at all."

 

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The fight over association health plans is headed to the appellate level, as the fight over short-term plans simmers below.

Critics have warned that these two prongs of the administration's health policy agenda could undermine ACA-compliant markets.

Proponents praised the administration's ongoing efforts to make health insurance more affordable.


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