Association Insurance Pushes On Despite Court Ruling

The Trump administration in June issued rules making it easier for small employers to band together to buy health insurance through an association health plan, which doesn’t have to meet all the rules of the Affordable Care Act. Nationally, an estimated 30,000 people are in such association health plans, a type of health insurance seeing a nascent resurgence following an initial drop-off after the ACA took effect in 2014.

In the first legal test, however, U.S. District Judge John Bates at the end of March sided with 11 states and the District of Columbia challenging the law. He invalidated a large chunk of those June rules, saying the administration issued them as an “end-run around the Affordable Care Act.”

So what now?

Unless the government seeks — which it has yet to do — and is granted a stay of the judge’s order, “plans formed under the vacated sections of the rule are illegal,” said Timothy Jost, an emeritus health law professor from Washington and Lee University. Still, that won’t mean anything for existing plans if the states or federal regulators choose not to enforce the ruling, Jost said. And that could cause more confusion in the marketplace.

The decision affects one pillar of a broader effort by the Trump administration to expand access to less expensive health insurance. Association plans have long been a favorite of Republicans, existing before the ACA. Supporters say they are one way to pool groups of businesses together to get better premium rates.

Critics, including the states that sued, say the new rules and other administration-backed changes will weaken the market for ACA plans by drawing out younger and healthier people. The states also argued that the new rules would be costly for them to administer, alleging they would have to devote more resources to preventing consumer fraud.