Blue states challenge Trump's association health plan rules

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Trump administration lawyers drew a skeptical response from a federal judge over a government initiative to let small businesses and individuals band together to create group health plans that offer cheaper coverage than the Affordable Care Act but without some of its protections.

During a hearing in Washington Thursday, a dozen Democratic state attorneys general asked U.S. District Judge John Bates to strike down DOL rules enabling association health plans. AHPs would leave people who have health insurance with lesser or no coverage while increasing the need to police newly created group plans for fraud, boosting costs for states, said Matthew Grieco, the attorney representing the plaintiffs.

The judge noted the administration’s initiative had been “overwhelmingly opposed” by the healthcare industry and that states’ concerns were mentioned in the government’s own guidance accompanying the regulation. When the government’s lawyers defended the measures as a bid to bolster the ACA, Bates questioned whether that position squared with President Trump’s stated intent to do away with his predecessor’s signature legislative achievement.

“Isn’t that what this is all about?” asked Bates, a 2001 appointee of Republican President George W. Bush. "I don’t see how we can divorce this from the Affordable Care Act," he later said.

Also see: How the new association health plan rule will transform small businesses

At the president’s urging, the Labor Department adopted its association health plan regulations last year and has been phasing them in since August. The attorneys general -- led by New York and including states ranging from Kentucky to California as well as the District of Columbia -- contend the new AHP rules violate Affordable Care Act provisions as well as the Employee Retirement Income Security Act, commonly known as ERISA.

The American Medical Association, the American Hospital Association and others also oppose the measures.

Justice Department lawyers, who are seeking to have the case dismissed, twice told the judge the states were pursuing a mere ERISA claim, prompting him to push back. The matter is a good deal weightier than that, he said, because the Labor Department rule changes were designed to address nothing less than Obamacare itself.

Brad Rosenberg, an attorney for the Justice Department, argued the intent of the rules is to provide health-care access to those “stuck” in individual or smaller markets. Grieco called the rule change “unambiguously contrary” to the will of Congress when it enacted the ACA.

Bates heard more than two hours of argument from attorneys for both sides without issuing a ruling. The judge promised to deliver a decision as quickly as he could, with Grieco pressing for a ruling by April 1.

“The danger level ramps up with each successive date that we hit,” Grieco said.

The other states challenging the rules are Massachusetts, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Oregon and Washington. The case is State of New York v. U.S. Department of Labor, 18-cv-1747, U.S. District Court, District of Columbia (Washington).

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