Some AGs challenge U.S. rules they say undermine Obamacare

Trump administration lawyers drew a skeptical response from a federal judge over an initiative to let small groups buy bare-bones health insurance.

Under the rule, small businesses and individuals could band together to create group health plans that offer cheaper coverage than Obamacare, but without some of its protections.

During a hearing in Washington Thursday, a dozen Democratic attorneys general asked U.S. District Judge John Bates to strike down Labor Department rules governing association health plans (AHPs).

When the government’s lawyers defended the measures as a bid to bolster the Affordable Care Act, Bates questioned whether that position squared with President Donald Trump’s stated intent to do away with his predecessor’s signature legislative achievement.

“Isn’t that what this is all about?” asked Bates, a 2001 appointee of Republican president George W. Bush.

At the president’s urging, the Labor Department adopted its association health plan regulations last year and has been phasing them in since August. The attorneys general contend the new AHP rules violate Affordable Care Act provisions as well as the Employee Retirement Income Security Act, commonly known as ERISA.

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A demonstrator in support of U.S. President Barack Obama's health-care law, the Affordable Care Act (ACA), holds up a "ACA is Here to Stay" sign after the U.S. Supreme Court ruled 6-3 to save Obamacare tax subsidies outside the Supreme Court in Washington, D.C., U.S., on Thursday, June 25, 2015. The U.S. Supreme Court upheld the nationwide tax subsidies that are a core component of President Barack Obama's health-care law rejecting a challenge that had threatened to gut the measure and undercut his legacy. Photographer: Andrew Harrer/Bloomberg

The challengers—led by New York and including states ranging from Kentucky to California as well as the District of Columbia—argue that AHPs may leave people who have health insurance with lesser or no coverage while increasing the need to police newly created group plans for fraud. In court, Bates noted that the initiative had been “overwhelmingly opposed” by the healthcare industry. The American Medical Association, the American Hospital Association and others have objected to it.

Justice Department lawyers, who are seeking to have the case dismissed, twice told the judge the states were pursuing a mere ERISA claim, prompting him to push back. The matter is a good deal weightier than that, he said, because the Labor Department rule changes were designed to address nothing less than Obamacare itself.

He heard more than two hours of argument from attorneys for both sides without issuing a ruling.

The other states challenging the rule are Massachusetts, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Oregon and Washington.

The case is State of New York v. U.S. Department of Labor, 18-cv-1747, U.S. District Court, District of Columbia (Washington).