A federal judge has struck down a rule letting individuals and small businesses pool together to buy health insurance, threatening a program encouraged by the Trump administration that was created as an escape hatch from high Obamacare premiums.
The ruling, issued Thursday by U.S. District Judge John Bates, an appointtee of former President George W. Bush, came after 11 states and the District of Columbia sued saying that the rules violated Obamacare and the Employee Retirement Income Security Act, or ERISA.
Bates agreed, concluding in his opinion that the rule, issued by the Department of Labor, was “clearly an end-run around” Obamacare. He also stated the Trump administration didn’t have the authority under ERISA to change the rules.
It was not immediately clear whether the administration’s up-and-running alternatives, known as “association health plans,” would still be allowed to operate. Bates in his ruling asked the Department of Labor to state whether any part of the rule could still stand.
The ruling is the latest blow this week to President Trump’s healthcare agenda. A judge struck down Medicaid work rules earlier this week, and many Republicans have said they do not wish to come up with a replacement plan after the administration in a surprise move asked an appeals court to fully invalidate Obamacare.
So far, association health plans have been covering the same benefits that Obamacare plans do, even though they are not obligated to, according to analyses by the industry publication Modern Healthcare and another by AssociationHealthPlans.com.
But critics warned that it was too early to conclude these benefits would remain. Unlike Obamacare, the plans are allowed to charge people more based on their health status, and prices could increase for next year. People who have pre-existing conditions, such as cancer or diabetes, can be asked to pay higher premiums that lead them to be priced out of the plans entirely.
Health insurers have been allowed to run the plans since September 2018, and association-created coverage was only allowed beginning in January 2019. New associations that form were supposed to kick off in April.
Obamacare had ended the plans to encourage more people to go into the exchanges and also because past plans had become insolvent, leaving people holding the bag for costly medical expenses.
[Also read: Trump DOJ asks appeals court to strike down all of Obamacare]
