“The Final Rule is clearly an end-run around the ACA,” Bates, an appointee of President George W. Bush, wrote in the Thursday ruling. “Indeed, as the President directed, and the Secretary of Labor confirmed, the Final Rule was designed to expand access to AHPs to avoid the most stringent requirements of the ACA.”
It marks the second significant legal defeat in as many days on the issue for President Trump, who not only recently revived his administration’s efforts to undo and replace President Barack Obama’s signature achievement but also vowed to make health care a centerpiece of his reelection campaign. On Wednesday, U.S. District Judge James E. Boasberg, an Obama appointee of the District of Columbia, blocked the administration’s plans for some Medicaid recipients in Kentucky and Arkansas to be subject to work requirements in exchange for health benefits, The Washington Post’s Amy Goldstein reported.
Implementing association health plans available outside the ACA was framed by the president as an affordable, and necessary, approach to help save people from the “nightmare of Obamacare.” But Bates saw the rule differently, describing it, as well as the Labor Department’s interpretation of the Employee Retirement Income Security Act, as “absurd.” Known as ERISA, the 1974 legislation is considered the blueprint for how employer-sponsored health plans have covered millions.
The attorneys general from 11 Democratic-led states and the District of Columbia that filed the lawsuit argued the new rules violate not just ACA provisions but also ERISA. In his opinion, Bates wrote that the Trump administration’s association health plans “does violence” to ERISA.
“In short, the Final Rule exceeds the statutory authority delegated by Congress in ERISA,” Bates wrote. He added: “The Final Rule’s provisions defining ‘employer’ to include associations of disparate employers and expanding membership in these associations to include working owners without employees are unlawful and must be set aside.”
The news comes amid a renewed effort by Trump and his administration to pivot toward health care ahead of 2020. Last week, the White House outlined how “choice and competition in health care markets” was beneficial for the consumer. On Tuesday, the administration made a surprise move to strike down the ACA yet again, when the Justice Department argued that the Obama-era law should be thrown out in its entirety.
In a statement to The Washington Post early Friday morning, Justice Department spokeswoman Kelly Laco said the administration disagrees with the Thursday ruling and is “considering all available options” moving forward.
“The Administration will continue to fight for sole proprietors and small businesses so that they can have the freedom to band together to obtain more affordable, quality healthcare coverage,” Laco said. “The Association Health Plan rule opened healthcare options for dozens of associations representing thousands of small businesses and sole proprietors and provided them with access to the same type of affordable healthcare options offered by other employers.”
Before a Thursday rally in Grand Rapids, Mich., his first since the conclusion to the special counsel investigation into Russian interference in the 2016 election, the president said a team of GOP senators would work on crafting legislation to replace the ACA that Trump predicted would be “really spectacular.” Health care was a theme Trump briefly mentioned at the Michigan rally, where he made reference to the association health-care plans, while also echoing the same kind of general talking points he’s used in recent days during his renewed health-care focus.
“We are going to get rid of Obamacare,” Trump said at the Thursday rally. “And I said it the other day, the Republican Party will become the party of great health care. It’s good. It’s important.”
The White House didn’t immediately respond to a request for comment late Thursday night.
The ruling was celebrated by New York State Attorney General Letitia James (D), whose state led the lawsuit against the expansion of association health plans.
“We are pleased that the District Court saw past the Trump administration’s transparent effort to sabotage our health care system and gut these critical consumer protections in the service of its partisan agenda,” James said in a statement to the media Thursday night.
A similar sentiment was expressed by Xavier Becerra (D), the California attorney general who has filed dozens of lawsuits against the administration on a wide range of issues, including health care.
“The rule of law prevailed yet again against the Trump Administration — today in the name of preventing employers from getting a free pass to offer barebones #healthcare coverage,” Becerra tweeted. “Proud to stand with the states that fought for this.”
Timothy S. Jost, emeritus professor of law at Washington and Lee University, told The Washington Post that he agreed with the opinion, saying that the judge “relied very little on the language in the ACA and made it a straightforward ERISA case, about how the rules violated a law that’s been around for a half a century.”
Jost added that employers interested in creating an association health plan must show more commonality of interest that extends beyond just living in the same state, which is one of the reasons the Trump administration’s push was struck down in Washington.
“The Trump administration’s rules on association health plans stretched the law much further than permitted by the original statute,” Jost said. “Beyond what is reasonable.”
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