When government lawyersdefended the measures as a bid to bolster the ACA, a judgequestioned whether that position squared with President DonaldTrump's stated intent to do away with his predecessor's signaturelegislative achievement. (Photo: Shutterstock)

Trump administration lawyers drew a skeptical response from afederal judge over a government initiative to let small businessesand individuals band together to create group health plans thatoffer cheaper coverage than Obamacare but without some of itsprotections.

During a hearing in Washington Thursday, a dozen Democraticstate attorneys general asked U.S. District Judge John Bates tostrike down U.S. Labor Department rules enabling association healthplans. So-called AHPs would leave people who have health insurancewith lesser or no coverage while increasing the need to policenewly created group plans for fraud, boosting costs for states, said MatthewGrieco, the attorney representing the plaintiffs.

Related: New ACA plans moving forward

The judge noted the administration's initiative had been“overwhelmingly opposed” by the health-care industry and thatstates' concerns were mentioned in the government's own guidanceaccompanying the regulation. When the government's lawyers defendedthe measures as a bid to bolster the Affordable Care Act, Batesquestioned whether that position squared with President DonaldTrump's stated intent to do away with his predecessor's signaturelegislative achievement.

“Isn't that what this is all about?” asked Bates, a 2001appointee of Republican president George W. Bush. “I don't see howwe can divorce this from the Affordable Care Act,” he latersaid.

At the president's urging, the Labor Department adopted itsassociation health plan regulations last year and has been phasingthem in since August. The attorneys general — led by New York andincluding states ranging from Kentucky to California as well as theDistrict of Columbia — contend the new AHP rules violate AffordableCare Act provisions as well as the Employee Retirement IncomeSecurity Act, commonly known as Erisa.

The American Medical Association, the American HospitalAssociation and others also oppose the measures.

Justice Department lawyers, who are seeking to have the casedismissed, twice told the judge the states were pursuing a mereErisa claim, prompting him to push back. The matter is a good dealweightier than that, he said, because the Labor Department rulechanges were designed to address nothing less than Obamacareitself.

Brad Rosenberg, an attorney for the Justice Department, arguedthe intent of the rules is to provide health-care access to those“stuck” in individual or smaller markets. Grieco called the rulechange “unambiguously contrary” to the will of Congress when itenacted the ACA.

Bates heard more than two hours of argument from attorneys forboth sides without issuing a ruling. The judge promised to delivera decision as quickly as he could, with Grieco pressing for aruling by April 1.

“The danger level ramps up with each successive date that wehit,” Grieco said.

The other states challenging the rules are Massachusetts, NewJersey, Pennsylvania, Delaware, Maryland, Virginia, Oregon andWashington.

The case is State of New York v. U.S. Department of Labor,18-cv-1747, U.S. District Court, District of Columbia(Washington).

Read more:

• Trump, states to square off on association healthplans
• 7 facts about the new association health planproposal
• Two opportunities created by association healthplans

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