A federal judge on Thursday struck down a Trump administration rule that allows small businesses to band together and set up health insurance plans that skirt requirements of the Affordable Care Act, the New York Times reported.

The rule is “clearly an end-run around the ACA,” said John Bates, a federal district judge for the District of Columbia.

Large employer-sponsored health plans can avoid some requirements of the Affordable Care Act. But Bates said the Trump administration had improperly stretched the statutory definition of “employer” to include “virtually any association of disparate employers connected by geographic proximity” — as well as sole proprietors who own businesses without any employees.

A health policy organization that has advocated for the plans said the ruling “represents clear harm” to small businesses if it stands. 

“Thousands of employees and family members within the small business community have already enrolled in association health plans – which help lower health care costs – since they first became available last fall,” Kev Coleman, president of AssociationHealthPlans.com, said in a statement. “They have provided a means by which broad benefits may be accessed at more economical prices.” 

Coleman said he doesn’t believe the ruling will stand up under appeal. The organization plans to release results of a new study next week that analyzes the work that chambers of commerce have done in launching new association health plans.

In September, the Iowa Insurance Division released new rules governing multiple employer health plans, association health plans and short-term limited duration plans that were authorized by state and federal legislation within the past year. Iowa’s legislature last year enacted a bill authorizing associations or related businesses to form Multiple Employer Welfare Arrangements. 

No organizations or businesses have formed association health plans in Iowa, according to a recent update from the Iowa Insurance Division. However, the same legislation allowed the Iowa Farm Bureau Federation to launch a health benefit plan for its 160,000 members that is exempt from regulation by the state’s insurance division. 

To read a Business Record Insider story about what experts had to say a year ago about association health plans’ potential for healing the health care system, click here.