“The final rule isclearly an end-run around the ACA,” the judge said. “The final rulewas designed to expand access to AHPs in order to avoid the moststringent requirements of the ACA.” (Photo: Shutterstock)

One of President Donald Trump's health-care initiatives intendedas a cheaper alternative to Obamacare suffered a crucial defeatwhen a judge ruled the policy violates the AffordableCare Act.

U.S. District Judge John Bates in Washington on Thursday blockednew rules governing so-called association health plans, or AHPs, which letbusinesses and individuals band together to create group healthplans that offer less expensive coverage than the ACA — but withoutsome of its protections.

The decision is the second blow to Trump's health agenda in asmany days. It follows twin rulings Wednesday by another Washingtonjudge who blocked administration-sanctioned plans to impose workrequirements for some Medicaid recipients in Kentucky andArkansas.

The Justice Department has hardened its opposition to Obamacarein separate litigation and Trump is seeking to make health care acenterpiece of the Republican agenda going in to the 2020 campaignseason.

“The final rule is clearly an end-run around the ACA,” Bates, a2001 appointee of Republican president George W. Bush, said in theruling. “Indeed, as the president directed, and the secretary oflabor confirmed, the final rule was designed to expand access toAHPs in order to avoid the most stringent requirements of theACA.”

The Justice Department and the White House didn't immediatelyrespond to requests for comment.

The final rules governing AHPs were created by the LaborDepartment to comply with an executive order issued by Trump inOctober 2017. The agency has been phasing them in since August. Thelegal challenge was brought by nearly a dozen Democratic stateattorneys general.

Some plans are already in the market, with offerings fromUnitedHealth Group Inc. and Anthem Inc. either available now or onthe way.

The attorneys general — led by New York and including statesranging from Kentucky to California as well as the District ofColumbia — argued the new rules violate ACA provisions as well asthe Employee Retirement Income Security Act, commonly known asErisa.

Bates cited the “absurdity” of the Labor Department'sinterpretation of a rule forming the basis of the initiative.

“We are pleased that the district court saw past the TrumpAdministration's transparent effort to sabotage our healthcaresystem, and gut these critical consumer protections in the serviceof its own partisan agenda,” New York Attorney General LetitiaJames said in a statement.

While association health plans are bound by some ACAprotections, they don't have to adhere to a minimum set ofbenefits. The plans can also use demographic factors such as age,gender and occupation to set premiums.

They're also not part of the same risk pools as Obamacare plans,raising concerns that they could siphon healthier people away fromthe ACA markets with lower premiums. Proponents of AHPs argued manyof those people were already priced out, and the policy would offerthem more affordable coverage.

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

— With assistance by Shannon Pettypiece, and KartikayMehrotra

Read more:

• Association health plans: Hurry up andwait
• Association health plans: What small businessesneed to know
• Will association health plans bring more healthcare scams?

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