The rule is “clearly an end-run around the ACA,” said Judge John Bates of the U.S. District Court for the District of Columbia.
The ruling was the second big defeat this week for President Donald Trump on a top-priority item on his health care agenda as the president has sought to use the courts to obliterate his predecessor’s signature achievement. Another judge on Wednesday blocked Medicaid work requirements in Arkansas and Kentucky.
Trump promoted the small business health plans as a way to save people from the “nightmare of Obamacare.” He told small-business owners in June that “you’re going to save massive amounts of money and have much better health care.”
In the economic report of the president last week, the White House said the small business plans — known as association health plans — showed how consumers benefit when the government reduces federal regulations and increases “choice and competition in health care markets.”
But Bates said that the rule authorizing such health plans was unlawful and must be set aside because it “does violence” to the Employee Retirement Income Security Act of 1974, the framework for employer-sponsored health plans covering tens of millions of Americans.
Large employer-sponsored health plans can avoid some requirements of the Affordable Care Act. But Bates said that the Trump administration had improperly stretched the statutory definition of “employer” to include “virtually any association of disparate employers connected by geographic proximity” — as well as sole proprietors who own businesses without any employees.
The lawsuit was filed by New York and 10 other states.
“We are pleased that the District Court saw past the Trump administration’s transparent effort to sabotage our health care system and gut these critical consumer protections in the service of its partisan agenda,” Attorney General Letitia James of New York state said Thursday night.