This week, federal district court judge John Bates struck down the Trump administration’s association health plan (AHP) rule, finalized in June 2019, which allows small businesses and associations to jointly create health insurance plans that avoid some Affordable Care Act (ACA) patient protections. Although AHP’s could not deny coverage or charge higher rates to people with pre-existing conditions, under the rule, they would not have to provide the ACA’s package of 10 essential health benefits such as prescription drug coverage, and preventive and chronic disease management services.

The state of New York and 10 other states filed a challenge to the rule. District court judge Bates found that the AHP rule illegally expands the definition of “employer” to include groups without any real commonality of interest and to bring working owners without employees within the scope of the federal Employee Retirement Income Security Act of 1974 (ERISA), which provides the legal framework for employer-sponsored health plans. These changes would violate both ERISA and the ACA. The judge’s ruling voids the main provisions of the AHP rule, but the administration can attempt to rewrite some aspects of it to encourage the creation of more AHP’s.

The AHP rule decision follows the administration’s decision earlier this week to not defend the ACA in a federal appeals court challenge brought by Republican-led states against the ACA. In court arguments this week, the administration argued that the entire ACA should be invalidated. This contrasts with the administration’s prior legal position opposing just the ACA’s individual employer mandate. President Trump this week also urged congressional Republicans to come up with an alternative to the ACA. Many Republicans are wary of attempting to repeal and replace the ACA following defeat of the last repeal and replace effort in 2017 and the results of the 2018 election, which gave control of the House of Representatives to Democrats.