Attorney General Becerra Joins 12-State Coalition in Filing Suit Over Trump Administration’s Move to Sabotage Affordable Care Act Protections

SACRAMENTO — California Attorney General Xavier Becerra joined 12 states in filing suit against the U.S. Department of Labor’s unlawful rule that removes critical consumer healthcare protections under the Affordable Care Act (ACA). The rule allows employers nationwide to group together as Association Health Plans (AHPs) and offer junk health plans that evade ACA coverage requirements and consumer protections. With this rule, the Trump Administration opens the door to allow insurers to discriminate based on health status, age or gender. This regulation would also raise premiums, increase fraud and disrupt the healthcare market. 

“This unlawful, irresponsible rule allows employers to offer their workers barebones health coverage. It would destabilize our insurance markets and put the health of working families nationwide at risk,” said Attorney General Becerra. “This is yet another attempt by the Trump Administration to sabotage the Affordable Care Act. As the President continues to do all he can to make Americans uninsured and unhealthy again, we in California will continue to fight for affordable, quality care for all.”

In October 2017, President Trump issued an Executive Order that directed the federal government to undermine the ACA. To that end, in January 2018, the Department of Labor issued a proposed regulation to expand AHPs in the market and finalized it in June. The rule uses the Employment Retirement Income Security Act (ERISA) to push a large number of small employers and individuals into the large group market, leaving them without the consumer protections of the ACA, such as protection against denial of care for people with pre-existing conditions. It will also encourage healthy consumers to leave the traditional health insurance market and pursue cheaper plans with fewer benefits through AHPs. This will drive up the price of comprehensive coverage drastically, leaving those most in need of medical care to face steep prices, or forego care altogether. 

The lawsuit filed in the U.S. District Court for the District of Columbia argues that the rule undermines the Affordable Care Act and unlawfully:

• Contradicts the clear statutory structure adopted by Congress to fundamentally reform the individual and small group markets;
• Conflicts with the ACA, ERISA and established law by allowing a self-employed individual with no other employees to be both an “employer” and “employee” under new ERISA definitions;
• Expands ERISA to allow all employers in a state to group into a profit-making commercial insurance regardless of the relationship between the employers, bucking decades of precedent that has required these associations to share some true commonality of interest;
• Radically departs from nearly forty years of settled ERISA law without a reasonable basis, making it arbitrary and capricious.

Attorney General Becerra joined a coalition of Attorneys General in March in sending a letter opposing the proposed rule because it would leave vulnerable consumers at risk. In addition to today’s action, the Attorney General has remained steadfast in his commitment to defending the Affordable Care Act. In October 2017, Attorney General Becerra filed a lawsuit with 17 states and the District of Columbia against the Trump administration over its decision to cease CSR payments. And in April, he led a coalition of 16 attorneys general to file a motion to intervene in Texas v. United States, taking further action a week later to oppose a preliminary injunction that would have temporarily repealed the Affordable Care Act.

A copy of the complaint is attached to the electronic version of this press release here.