In June, the Department of Labor finalized its rule expanding access to association health plans, which allows Americans to join in groups to purchase health insurance across state lines.
However, last week, Kentucky Attorney General Andy Beshear joined 11 other state generals -- all Democrats -- in suing the federal government to overturn the rule. Beshear said the federal government is illegally manipulating a 1974 law -- the Employment Retirement Income Security Act or ERISA -- to allow the creation of association health plans by employment groups that would offer fewer protections for Kentuckians currently in the individual and small group health insurance plans under the ACA.
"The rule seeks to return Kentucky to a time when insurance companies could discriminate in premiums or coverage against individuals and small business employees based on pre-existing conditions, age and even gender," Beshear said. "With Kentuckians facing so many needs, we certainly cannot back away from the ACA provisions that our Kentucky families rely on for their health care."
U.S. Senator Rand Paul, R-Kentucky, said he is disappointed Beshear is suing to prevent customers from joining "association health plans." Paul said the plans give greater flexibility and a wider range of options for citizens to find affordable healthcare.
Throughout 2017, Paul worked directly with President Donald Trump and administration officials to achieve the change, and he joined President Trump at the White House in October 2017 for the signing of an executive order paving the way for the reform.
"For months, I worked directly with President Donald Trump and Secretary Acosta to make this happen. Today, we are putting more power back into the hands of the American people to choose the health insurance plan that best meets their needs at a price they can afford," Paul said in June when the rule was finalized. "I refused to believe we could not keep fighting for pro-patient, pro-worker, and pro-family solutions in health care, and I applaud President Trump for responding and delivering one of the most significant market-based health care reforms in a generation."
Beshear said Congress has legislated over the years to protect healthcare consumers from fraudulent conduct and to ensure consumers have comprehensive health coverage without having higher premiums or fewer benefits based on a pre-existing condition. He said the association health-plan rule would undo critical federal consumer protections and unduly expand access to association health plans without sufficient justification or consideration of the consequences.
"If the rule allows spin-off employer association health groups that meet the ACA's requirement of minimum essential health care coverage, then employees in these groups will lose their ability to garner federal tax credits," Beshear said. "This will increase the cost of health care coverage for many Kentuckians."
Jason Bailey, executive director of the Kentucky Center for Economic Policy, said association health plans are another backdoor way to sabotage the important coverage gains made for so many through the Affordable Care Act.
"Association health plans create a race to the bottom on protections like those for pre-existing conditions," he said. "Junk insurance plans, like the new rule allows, will leave more Kentuckians at risk of not being covered when they get ill and will worsen problems with affordability for those who remain in regular insurance plans."
Paul argues the plans will actually allow individuals to use leverage to get less-expensive and more-comprehensive health insurance.
"Beshear is essentially suing to prevent individuals the chance to get the same kind of insurance big corporations get," he said.
Under the rule, association health plans can serve employers in a city, county, state, or a multi-state metropolitan area, or a particular industry nationwide. Sole proprietors as well as their families will be permitted to join such plans.
The Congressional Budget Office estimates that several million will switch their coverage to more affordable and more flexible AHP plans and save thousands of dollars in premiums. CBO also estimates that 400,000 previously uninsured people will gain coverage under AHPs.
Jonathan Greene is the editor of The Register; follow him on Twitter @jgreeneRR.