Twelve attorneys general (AGs) filed suit against the Department of Labor (DOL) on Thursday, alleging that its Association Health Plan (AHP) rule violates federal law—primarily the Affordable Care Act (ACA) and the Employee Retirement Income Security Act (ERISA)—and harms consumers and states.
Here are some of the key issues the AGs raise in their complaint (PDF):
- AHPs are likely to create fraud. AHPs and their cousins, multiple employer welfare arrangements (MEWAs), have a long history of fraud and abuse, the complaint says. When fraudulent AHPs spiraled out of control in the 1970s and 1980s, Congress undertook several efforts to stop them, but with limited success. Predatory associations selling phony health insurance have defrauded and deceived customers throughout the 2000s. Expanding AHPs is like reopening Pandora’s box.
- The final rule unfairly burdens states. The rule leaves oversight of AHPs to states. Given AHPs’ likelihood of fraud, this will be a time-consuming and costly undertaking, involving the creation of new policies and the prosecution of fraudulent plans while reducing tax revenue. It will also draw people away from the individual and employer-based insurance markets, increasing costs for those who stay and perhaps even pricing many people out.
- The final rule permits discrimination. AHPs would be allowed to deny coverage or benefits based on “non-health factors,” such as age, gender, education level and occupation. They could also deny consumers coverage or raise their rates based on pre-existing conditions and claims history. In addition to putting consumers’ health at risk, this violates provisions in the ACA that protect against those forms of discrimination.
- DOL is overstepping its authority, and the final rule violates legislative intent. Congress rejected efforts to expand AHPs from the mid-1990s through the early 2000s, as well as in 2005, 2009 and 2017. “DOL is exploiting its regulatory authority at the request of the president to circumvent Congress … effectively legislating changes in defiance of Congress,” the complaint says. It notes that DOL is relying on its authority to implement ERISA to implement the rule.
- The final rule would create an ERISA rabbit hole. The rule would upend decades of ERISA-related judicial precedent. At the same time, it “pointedly threatens to use ERISA to enact future regulations,” the complaint reads.
Has the administration tied itself into a knot? Officials with the Department of Health and Human Services have consistently stressed their desire to expand consumer choice, including through AHPs and other efforts to chip away at the ACA.
Last month, Attorney General Jeff Sessions announced that he would not defend the 2010 law in Texas’ suit. But one top Trump administration official, Centers for Medicare & Medicaid Services Administrator Seema Verma, has said her agency has “a duty to enforce and uphold” the ACA as long as it remains the law.