DOL set to reverse Trump admin's contentious association health plan policy

The Department of Labor (DOL) will release a final rule that completely overturns a Trump-era policy allowing small businesses to skirt the Affordable Care Act (ACA) using association health plans.

In 2018, the Trump administration first expanded the types of groups allowed to join and form an association health plan. Federal officials said at the time that permitting employers to join associations based on industry or geography would give small employers or sole proprietors a greater number of insurance options and fill in the gaps left by the ACA.

A federal judge subsequently found the rule overstepped authority under the Employee Retirement Income Security Act (ERISA) and was created to sidestep the ACA coverage requirements. The remaining aspects still in effect will be upended under the upcoming rule.

Expected to be published in the Federal Register April 30, the rule would take effect in July, Bloomberg reported.

“The department now believes that the core provisions of the 2018 association health plan rule are, at a minimum, not consistent with the best reading of ERISA’s statutory requirements governing group health plans,” the unpublished rule reads.

Of the 58 comments the DOL received on a draft version, the department said a majority of submissions supported rescinding the Trump rule. Commenters noted that association health plans did not need to provide emergency services, prescription drug benefits or inpatient hospital care, which had allowed the plans to “cherry pick” healthier individuals when designing a plan.

While some employers appreciated the cheaper alternative association health plans offer, others said the Trump rule was just a way to offer less comprehensive benefits. Lawmakers have also been of two minds on the issue.

“The administration’s final rule fails on every mark, moving us backwards, not forwards, in providing Americans more ways to get high-quality, low-cost health care,” said Virginia Foxx, R-North Carolina, chair of the House Committee on Education and the Workforce, in a statement.

In contrast, Bobby Scott, D-Virginia., applauded the agency’s intention to reverse the rule in back December.

“Specifically, the rescinded rule would have expanded enrollment in association plans that cherry-pick low-risk, young individuals for a pool separate from the ACA Marketplace,” he said. “Association health plans could also exclude certain categories of coverage, such as maternity care, mental health care, or substance use disorder treatment, to dissuade certain groups or individuals from enrolling.

“If healthy, low-risk individuals can leave the ACA marketplace risk pool, join a separate association, and pay lower rates, those who did not get into these plans will, on average, be forced to pay higher premiums,” Scott added.

Federal officials sided with commenters wanting the policy reversed but said the reversal is based on ERISA interpretation, not the ACA.

The Biden administration has been hard at work this month finalizing regulatory rules in health and other industries, the American Prospect reported. If Trump retakes the White House, he can use the Congressional Review Act to overturn federal agency rules with Senate majority approval, but only if they are approved after late May.