Judge Strikes Down Small Business Health Insurance Plan


August 15, 2019

U.S. District Court Judge John D. Bates struck down a small business health insurance plan supported by the Trump administration. The judge indicated that association health plans were designed as an “end-run” around the Affordable Care Act (ACA). This was the second decision in a week striking two efforts by Republicans to change major components of the ACA.

Association health plans would not offer the benefits required under the ACA but would instead allow small business and sole proprietors to join together in order to offer lower-cost insurance options to employees. These plans would also be available across state lines, something that was a key part of President Trump’s campaign.

Even before the ruling, the plans had not made a significant impact on the market, with between 3 and 4 million people enrolled in this type of plan compared to more than 160 million enrolled in more traditional, comprehensive employer plans.

Several states, including New York, whose Attorney General Letitia James was an outspoken opponent of association health plans, filed suit against the administration. Many state officials believe that allowing the federal government to interfere in small business policies would infringe on the authority of the state to regulate them. Attorney James commented that Judge Bates “saw past the Trump administration’s transparent effort to sabotage our health care system and put these critical consumer protections in the service of its own partisan agenda.”

Despite strong promises during the campaign to repeal the ACA, the Trump administration has been unable to eliminate or replace the legislation through Congress.

Now, the administration is using regulatory powers as an alternative. It granted similar flexibility on benefits to small business plans as those large companies can receive. Most large companies offer health insurance benefits that are not subject to state regulations and the ACA did not make significant changes to them.

Judge Bates ruled that small businesses and sole proprietors should not be treated the same as large employers when it pertains to healthcare. His ruling indicates that it may be difficult for the Trump administration to use regulations in transforming the ACA, especially since Judge Bates was appointed by George W. Bush, a Republican.

There was no immediate response from the administration, but insiders say they plan to continue pushing for small business policies in an effort to advance the president’s agenda.

Another setback to the Trump administration’s push for a more conservative healthcare system came in the form of a different federal judge striking down Medicaid work requirements in Kentucky and Arkansas.