The Department of Labor (DOL) is poised to release a final rule that will completely overturn a controversial policy from the Trump era, which allowed small businesses to circumvent the Affordable Care Act (ACA) through the use of association health plans. This move is expected to have significant implications for the healthcare landscape in the United States.
The Trump Administration’s Stance
In 2018, the Trump administration took steps to expand the types of groups permitted to join and form association health plans. Federal officials at the time argued that allowing employers to join associations based on industry or geography would provide small employers or sole proprietors with a greater number of insurance options, effectively filling the gaps left by the ACA.
However, a federal judge subsequently ruled that the rule overstepped the authority granted under the Employee Retirement Income Security Act (ERISA) and was created to circumvent the ACA’s coverage requirements. The remaining aspects of the rule still in effect will be upended under the upcoming DOL regulation.
The Biden Administration’s Reversal
According to Bloomberg’s report, the new rule is expected to be published in the Federal Register on April 30, and “if they are approved after late May, the rule would take effect in July.” The unpublished rule states, “The department now believes that the core provisions of the 2018 association health plan rule are, at a minimum, not consistent with the best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.”
Public Comments and Reactions
The DOL received 58 comments on a draft version of the rule, with the majority of submissions supporting the rescission of the Trump-era policy. Commenters noted that association health plans were not required to provide emergency services, prescription drug benefits, or inpatient hospital care, which allowed these plans to “cherry pick” healthier individuals when designing their offerings.
While some employers appreciated the cheaper alternative offered by association health plans, others viewed the Trump rule as a way to offer less comprehensive benefits. Lawmakers have also been divided on the issue, with Virginia Foxx, R-North Carolina, chair of the House Committee on Education and the Workforce, stating that “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.”
On the other hand, Bobby Scott, D-Virginia, applauded the agency’s intention to reverse the rule, saying, “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. 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.”
The Administration’s Justification
Federal officials have sided with commenters advocating for the policy’s reversal, but they have emphasized that the decision is based on the interpretation of ERISA, not the ACA. “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, highlighting the potential impact on the ACA marketplace.
As the Biden administration continues to finalize regulatory rules across various industries, the American Prospect reported that if Trump were to regain the White House, he could use the Congressional Review Act to overturn federal agency rules with Senate majority approval, “but only if they are approved after late May.“
