Three judges at the U.S. Court of Appeals for the D.C. Circuit are thinking about whether the U.S. Department of Labor has the authority to loosen the rules that determine what kinds of employers can unite to act as one employer for association health plan (AHP) purposes.
The judges heard oral arguments on State of New York et al. v. the U.S. Department of Labor et al. (Case Number 19-5125) — a suit brought by officials in New York state and other states that want tight restrictions on AHP — last week in Washington.
Large employers can avoid complying with state insurance rules by choosing to self-insure.
In theory, an AHP can help small employers achieve that same goal, by letting the small employers combine to act as one big employer.
The administration of President Donald Trump released AHP regulations in 2017 that eased access to AHPs by adopting a flexible definition of the term “employer” for purposes of forming an AHP. Under the new regulations, an AHP can serve all kinds of employers in a community, or serve a national market of employers in a particular industry.
The administration also moved to let AHP organizers exist solely to provide AHPs, rather than to act as charities, general-purpose trade groups or other types of organizations.
Officials in New York state and other states that tend to support the Affordable Care Act framework say an expanded AHP program could weaken ACA protections; destabilize the small-group market by leading more of the small employers with younger, healthier workers out of the fully insured small-group market; and expose participating employers to the risk that poorly supervised AHPs might collapse.
Those officials have argued in court that the Trump administration has interpreted the definition of employer in an overly broad and unreasonable way.