Eleven (11) states and the District of Columbia have filed a lawsuit against the federal government in an attempt to block regulation that would expand access to association health plans.
The Washington Examiner reported that New York is leading the lawsuit against the US Department of Labor – Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia, and Washington are the other states.
Filed just yesterday, the lawsuit is looking to stop legislation finalized earlier this year by the Trump administration that would allow small businesses to purchase insurance as a group. According to the lawsuit, the legislation aims to transfer a “large number of small employers and individuals into the large group market because the [Affordable Care Act’s] core protections do not apply to that market.”
These core protections include coverage for people with pre-existing conditions and a requirement for ACA-participating insurers to cover certain essential health benefits.
“Worse yet, health plans created under the final rule would lack basic market incentives and statutory protections under federal law that apply to plans from true large employers,” the lawsuit continued.
The lawsuit additionally claims that the bill is unlawful since it conflicts with the “clear statutory structure that Congress adopted in the ACA to apply fundamental protections to the individual and small group markets.”
Typically, people use the individual market if they do not receive insurance through the government or their job, while the small group market is used by small businesses to insure employees.
The states also claim in the lawsuit that the proposed rule conflicts with federal law by labeling any self-employed person a “working owner,” which allows them to create a group health plan. The plaintiffs argue that because any self-employed person can create a group health plan, they would have to devote resources to “police a flood of inadequate or fraudulent plans newly offered by associations.”
Critics have also slammed another regulation proposed by the Trump administration that expands short-term plan durations from 90 days to 12 months. Detractors say that both regulations would push younger and healthier people away from the ACA towards the cheaper plans, destabilizing the Obamacare marketplaces.