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U.S. President Donald Trump at an announcement of a new program to provide medical care to veterans at The White House on Aug. 3, 2017.
President Donald Trump’s plan to make it easier for small businesses to band together and buy stripped-down health insurance plans could violate a federal law governing employee benefit plans and will almost certainly be challenged in court, legal experts said.
Trump signed an executive order on Thursday aimed at letting small businesses join nationwide associations for the purpose of buying large-group health plans that are not subject to coverage
requirements of the Affordable Care Act, commonly known as Obamacare.
Industry experts said Trump’s order could ultimately enable such associations to purchase insurance from states with the fewest regulations. That would undermine Obamacare, former Democratic President Barack Obama’s signature healthcare law, which Republicans have failed to repeal.
Several healthcare and employment law experts said if Trump’s plan moves forward, states could argue the federal government had overstepped its authority in violation of the U.S. Employee Retirement Income Security Act (ERISA), a law that governs large-group plans.
In Thursday’s order, Trump asked the Department of Labor to propose rules that would allow more employers to participate in association health plans. Legal experts said lawsuits might not
be brought until such regulations are issued.
Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms, said ERISA granted states the right to regulate association health plans.
Attorneys general could argue the federal government had overreached if the Trump administration winds up allowing associations to buy health coverage across borders that only complies with a single state’s regulations.
“Any attempt to allow the sale of association plans to small groups across state lines will be open to legal scrutiny as to whether it is violating ERISA and undermining state authority,”
'Prepared to fight'
A White House official said that “departments will be drafting rules in a way that minimizes litigation risk.”
The Department of Labor “will be reviewing ERISA in the course of following the President’s direction” in the order, the official said.
A number of state attorneys general from Democratic-leaning states said on Thursday they would fight any efforts to weaken Obamacare, which extended health insurance to 20 million Americans, but which Republicans call intrusive and ineffective.
“It should come as no surprise that California is prepared to fight in court to protect affordable healthcare for its people,” said Xavier Becerra, the state’s Democratic attorney general.