Current association plans are now in legal limbo.
The future of association plans is suddenly in doubt as U.S. District Court Judge John Bates ruled the plans unlawful. Association plans, or AHPs, allow sole proprietors and small business to join together and bargain for group rates the same way large employers do. Judge Bates claimed association plans were incongruous with the Employee Retirement Security Income Act (ERISA), which sets minimum standards for company retirement and health plans.
Proponents of the AHPs argued the plans should be granted the same flexibility any large employer receives. The court disagreed, claiming that small businesses cannot be classified the same way as big companies, even if they are in associations.
Critics of AHPs claimed the plans are a partisan workaround to the requirements of the ACA, including minimum coverages and preexisting conditions. There is also concern for the financial viability of the AHPs. In the early 2000s, plans that existed in the similar legal limbo to AHPs went under, leaving over 200,000 policyholders with $250 million in unpaid medical bills. Ultimately states have the final word on insurance regulation, and some state laws would make implementation of AHPs difficult or impossible.
Critics also point out that the rollout of AHPs was not as popular as the Trump Administration had hoped. Many insurers have focused on expanding commercial plans or Medicare Advantage over promoting AHPs. AHP proponents projected enrollment to eclipse 3 or 4 million, but current enrollment is only in the thousands.
What happens to existing AHPs after the ruling remains to be seen. The President has suggested appealing the ruling. This ruling is the second insurance setback for the President this week. On Wednesday, a court blocked the President’s Medicaid work requirement.