Hundreds of small businesses in Michigan that use an association health plan for health benefits shouldn't worry yet about a federal judge’s ruling that struck down a 2017 executive order by President Trump.
Rob Fowler, president of TranscendAHP, expects that the U.S. Department of Labor will appeal Thursday’s ruling by U.S. District Judge John Bates of the District of Columbia. That appeal should take 12 to 18 months, meaning that TranscendAHP’s coverage remains intact as the legal process plays out.
“We continue business as usual until something changes, and this doesn’t change anything necessarily at this point,” said Fowler, who’s also CEO of the Small Business Association of Michigan.
SBAM and TranscendAHP today were “awaiting some kind of signal” from the Department of Labor on an appeal.
The Lansing-based SBAM and Warren-based Michigan Business and Professional Association created TranscendAHP last fall following a presidential executive order that broadened the ability of small businesses to unite to form association health plans.
Nearly 400 small businesses across the state, half of them sole proprietors, now use TranscendAHP for health benefits, Fowler said.
In his ruling Thursday, Judge Bates said that President Trump’s executive order was “intended and designed to end run the requirements” of the federal Affordable Care Act and “does so only by ignoring the language and purpose” of the health reform law and the federal Employee Retirement Income Security Act that regulates health plans.
“Indeed, as the president directed, and the secretary of labor confirmed, the final rule was designed to expand access to AHPs to avoid the most stringent requirements of the ACA,” the judge’s ruling states.
A Department of Labor rule implemented last June “unreasonably expands the definition of ‘employers’ to include groups without any real commonality of interest and to bring working owners without employees within ERISA’s scope despite Congress’s clear intent that ERISA cover benefits arising out of employment relationships,” Judge Bates, an appointee of former President George W. Bush, wrote in the ruling.
Fowler views the ruling, based on a case brought by attorneys general in 11 states, as “just swirling in politics” in the battle over the ACA.
“The Trump administration has politicized it and so has the other side,” Fowler said. “This is a politically driven fight that we’re caught in the middle of, but it will play out in our favor because it’s working.”
Association health plans have “been around for a very long time and they are a solution” for small businesses seeking lower cost employee health coverage, he said.
Association health plans allow similar employers — those in the same trade, industry, or profession, or based in the same geographical area — to come together to form a large risk pool of employees to insure.
In qualifying for large-group insurance coverage, the pool of small employers avoids some of the taxes, fees, regulations and coverage mandates in the federal Affordable Care Act that apply to small businesses, including requirements to offer 10 essential benefits in their health plans. A small employer’s location in the state, composition of its workforce, industry type and group size also matter in setting rates.
“Judge Bates’ ruling on the new Department of Labor regulation is not only disappointing but also represents clear harm to small businesses across the nation. Thousands of employees and family members within the small business community have already enrolled in association health plans — which help lower health care costs — since they first became available last fall,” said Kevin Coleman, the founder of associationhealthplans.com, a Nashville, Tenn.-based resource site for AHPs.
“They have provided a means by which broad benefits may be accessed at more economical prices. While I do not believe today’s ruling will survive appeal, I believe Judge Bates’ decision is an unnecessary detour on small businesses’ path toward more affordable health coverage,” Coleman said in a statement.
Fowler expects that an appeals court hearing on the case on appeal will stay Judge Bates’ ruling. The issue is likely to get decided by the U.S. Supreme Court, he said.
“It seems to us that this has staying power. It’s working in Michigan,” Fowler said of TranscendAHP. “Every company is saving money of they wouldn’t be there.”