Trump administration lawyers drew a skeptical response from a federal judge over an initiative to let small businesses and individuals band together to create group health plans that offer cheaper coverage than individual or small-group major medical plans but without some Affordable Care Act (ACA) protections.

During a hearing in Washington Thursday, a dozen Democratic attorneys general asked U.S. District Judge John Bates to strike down U.S. Labor Department rules governing association health plans (AHPs).

(Related: Feds Post Association Health Plan Instruction Book)

When the government’s lawyers defended the measures as a bid to bolster the ACA, Bates questioned whether that position squared with President Donald 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.

At the president’s urging, the Labor Department adopted AHP regulations last year. The department has been phasing the regulations in since August. The attorneys general contend the new AHP rules violate Affordable Care Act (ACA) provisions as well as the Employee Retirement Income Security Act (ERISA).

The challengers — led by New York state and including states ranging from Kentucky to California, as well as the District of Columbia — argue that AHPs may leave people who have health insurance with lesser or no coverage while increasing the need to police newly created group plans for fraud. In court, Bates noted that the initiative had been “overwhelmingly opposed” by the health care industry. The American Medical Association, the American Hospital Association and others have objected to it.

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, since the Labor Department rule changes were designed to address nothing less than problems created by the ACA.

The judge heard more than two hours of argument from attorneys for both sides without issuing a ruling.

The other states challenging the rule 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).

 

— Read Coalition Sues Trump Administration Over Association Health Plan Regs, on ThinkAdvisor.

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