Scales of justice (Credit: Thinkstock)

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.

(Related: Judge Blocks Trump Administration’s Association Health Plan Regulations)

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.

Kev Coleman, president of AssociationHealthPlans.com of Nashville, Tenn., attended the oral arguments and wrote a commentary on what he saw for his organization.

Judge David Tatel, who was appointed to the court by former President Bill Clinton, asked the most questions and challenged both sides with equal vigor, Coleman wrote.

Judge Gregory Katsas, a judge appointed by Trump, seemed to be more skeptical of the states’ position, Coleman wrote.

Judge Karen LeCraft Henderson, who was appointed by former President Ronald Reagan, “did not direct any questions to either attorney during the proceedings,” Coleman reported.

“From the perspective of stakeholders in the new Trump-era association health plan regulation, the questions asked by the appeals judges were a cause for optimism inasmuch as they sincerely explored many of the core arguments justifying the legality of the new regulation,” Coleman said.

Related

Links to AHP case pleadings are available here.

— Read Federal Judge Hears Association Health Plan Suit Arguments, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on FacebookLinkedIn and Twitter.