Employment Lawsuit Could Open Door to Unregulated ‘Junk’ Health Insurance Plans
A high-stakes lawsuit against the Department of Labor may expand access to limited-partnership health plans, threatening ACA protections and state oversight.
POLICY WIRE — Washington, D.C. — A long-running legal battle over the definition of employment is drawing intense scrutiny from health policy experts, as a potential settlement could pave the way for a surge in low-cost, limited-benefit health insurance plans that bypass standard consumer protections.
The case, which centers on Data Marketing Partnership, has been active since 2019. The company is seeking official recognition as an employer, a status that would allow it to offer health coverage to its limited partners without adhering to state insurance regulations or the comprehensive benefit requirements mandated by the Affordable Care Act (ACA).
Under the current model, consumers gain access to these plans by downloading an app that tracks their internet browsing habits, which the company then monetizes. While proponents argue this provides a necessary, affordable alternative for those who do not qualify for ACA subsidies, critics warn it could lead to a proliferation of unregulated insurance products.
Katie Keith, director of the Center for Health Policy and the Law at Georgetown University, expressed concern that a settlement favoring the company could serve as an opening salvo for promoting junk plans that fail to meet ACA standards. Ali Khawar, a former Department of Labor official, added that such a shift could logically result in a wave of functionally unregulated insurance entities.
📄 POLICY WIRE WHITEPAPER PUBLISHED: PAKISTAN’S NATIONAL SECURITY POLICY PRIORITIES
The legal dispute hinges on the 1974 Employee Retirement Income Security Act, which allows self-insured employers to bypass state-level oversight and certain ACA mandates. While the Department of Labor has historically defended its position that data-tracking users are not bona fide employees, court rulings in Texas have challenged this stance, leading to the current uncertainty.
State insurance commissioners are sounding the alarm, noting that these plans often leave consumers with significant unpaid medical bills. Maryland, Washington, Maine, and Connecticut have already taken regulatory or enforcement actions against various entities offering similar limited-partnership coverage.
In court filings, Data Marketing Partnership stated that a failure to secure employer designation would force it to terminate coverage for approximately 50,000 policyholders. Meanwhile, 19 patient advocacy groups and U.S. Rep. Bobby Scott (D-Va.) have urged the Department of Labor to maintain its defense, warning that a settlement could undermine decades of efforts to stabilize health insurance markets.
Reporting by Policy-Wire (PW)
