The executive order from Donald Trump aimed at letting small businesses join nationwide associations for the purpose of buying large-group health plans not subject to coverage requirements of the Affordable Care Act could be in for a legal battle.
According to a CNBC report, health care and employment law experts warn that if the EO proceeds, states could argue that the federal government overstepped its authority in violation of the Employee Retirement Income Security Act, which governs large-group plans.
Reuters reports that legal experts say states might argue that associations formed for the purpose of buying insurance are not employers under ERISA. According to Allison Hoffman, a professor at the University of Pennsylvania School of Law, although the ERISA allows associations to qualify as employers and manage large-group plans, federal regulators have usually required that members of such associations have a high degree of common interest beyond just buying insurance.
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Trump's EO asks the Department of Labor to propose rules that would allow more employers to participate in association health plans. Legal experts said lawsuits might not be brought until such regulations are issued.
Dania Palanker, an assistant research professor at Georgetown University's Center on Health Insurance Reforms, said in the report that since ERISA grants states the right to regulate association health plans, attorneys general could argue that the federal government has overreached if the Trump administration winds up allowing associations to buy health coverage across borders that only complies with a single state's regulations.
Industry experts have said that Trump's order could end up enabling such associations to purchase insurance from states with the fewest regulations — which undermines a key provision of the ACA by allowing a "lowest-common-denominator" approach to the purchase of cheap health coverage that is stripped to the bare bones.
Numerous state attorneys general from Democratic-leaning states have already declared their intentions to fight any efforts to weaken the ACA, which has extended health insurance to 20 million Americans. Xavier Becerra, California's Democratic attorney general, is quoted in the report saying, "It should come as no surprise that California is prepared to fight in court to protect affordable health care for its people."
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