The Patient Protection and Affordable Care Act (ACA) implements a number of insurance reforms tailored to different types of insurance markets. Under the ACA, the individual and small-group (i.e., employment-based coverage for small employers) insurance markets are subject to certain requirements that are not applicable to large-group markets). Among those are the requirements to provide coverage for essential health benefits and set prices for insurance based on adjusted community rating (i.e., limiting the reasons for which an insurance company can charge different customers different rates).
Acting under the directive of an executive order issued by President Trump, the Department of Labor (DOL) issued a rule under the Employee Retirement Income Security Act (ERISA) that redefined the term “employer” under ERISA. DOL’s rule makes it easier for individuals and small businesses who would otherwise be included in ACA-regulated individual and small-group markets to join together into associations that could obtain insurance under the large-group market. Because these associations would not be subject to various ACA requirements, they would have more freedom to discriminate in their prices on the basis of gender, occupation, or age and to not provide coverage to essential health benefits.
In a challenge to the rule brought by several states, the district court struck down the rule under the Administrative Procedure Act. The court concluded that DOL had failed to explain why its new standard for “employer” under ERISA reasonably maintained the distinction between employer associations and insurance companies. DOL appealed the district court’s decision to the D.C. Circuit Court of Appeals.
Public Citizen filed an amicus brief in support of the states and on behalf of itself and six other public interest organizations: Families USA, National Partnership for Women & Families, National Women’s Law Center, National Employment Law Project, National Health Law Program, and United Hospital Fund. The amicus brief explained that DOL’s new standard for associations who could be deemed an “employer” under ERISA violated ERISA because it failed to preserve any meaningful distinction between employer associations and insurance companies. The brief also explained that DOL had misinterpreted another statute, the Public Health Service Act, to permit these new associations to purchase insurance in the large-group market. Finally, the brief explained how DOL’s rule impermissibly replaces Congress’s design in the ACA with a framework more to the administration’s liking and that, as a result, important ACA protections designed to end discriminatory treatment in health coverage, lower prices, and ensure comprehensive coverage would be undermined.