Judge Blocks Association Health Plans Rule as Unlawful Effort to Bypass ACA

The DOL ignored 'the language and purpose of both ERISA and the ACA,' the judge ruled, vacating key provisions of the final rule and sending the rest back for further consideration.

A federal judge dealt another blow Thursday to the Trump administration's healthcare policy agenda, rejecting key provisions of the Association Health Plans (AHP) final rule it released last year.

The rule had been designed to make it easier for small businesses to band together and buy insurance coverage in groups, but U.S. District Judge John D. Bates in the D.C. District Court blocked the rule, calling it a blatant attempt to bypass the Affordable Care Act (ACA).

In drafting the rule, the U.S. Department of Labor (DOL) unreasonably expanded the Employee Retirement Income Security Act's (ERISA) definition of "employers," Bates wrote.

"Because the ACA defines terms key to its implementation—including 'employer' and 'employee'—according to the definition of these terms in ERISA, the Final Rule expands AHPs in a way that allows small businesses and some individuals to avoid the healthcare market requirements imposed by the ACA," Bates wrote in his ruling.

The idea that expanding access to AHPs was part of an effort to ease the burden imposed by the ACA is well established. U.S. Labor Secretary Alexander Acosta has said that himself. The problem, Bates wrote, came in how DOL handled the laws. The rule bypassed the ACA's requirements "only by ignoring the language and purpose of both ERISA and the ACA," he wrote.

"DOL's explanation of how the Final Rule operates under the ACA relies on a tortured reading of the ACA's statutory text that undermines the market structure that Congress so carefully crafted," he added.

Bates vacated key provisions of the rule and sent the rest back to DOL for further consideration.

Proponents of AHPs criticized the decision. Kev Coleman, president and founder of AssociationHealthPlans.com, said the decision will harm small businesses nationwide.

"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," Coleman said in a statement to HealthLeaders. "They have provided a means by which broad benefits may be accessed at more economical prices."

Coleman said he believes Bates' decision will be overturned on appeal.

The decision comes in the same week that another federal judge blocked the Trump administration's approval of Medicaid work requirements in Arkansas and Kentucky.