U.S. Rejects Obamacare Work-Around Sought by Republican States

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(Bloomberg) -- A health insurance venture that threatened to erode Obamacare and had the backing of seven Republican state attorneys general has been rejected by the U.S. Labor Department.

The proposal, from an obscure company in Georgia that was the subject of a Bloomberg News article last month, won the support of states including Georgia and Louisiana, whose attorney general personally pitched it last year to senior White House officials. Among those pushing for the plan was a Washington lobbying firm whose senior adviser is Corey Lewandowski, Donald Trump’s onetime campaign manager.

The initiative would allow LP Management Services to create a data-sharing partnership that small firms could join; after agreeing to provide online user data, those in the network could then pay full premiums to buy into LP Management’s health insurance.

But in a highly technical advisory ruling, the Labor Department said on Jan. 24 that those joining the venture wouldn’t be “bona fide partners” and “do not work for or through the partnership.”

“The DOL is turning LP Management down,” said Timothy Jost, a health-law expert at Washington and Lee University.

Several health policy specialists who reviewed the plan for Bloomberg News said LP Management’s plan, if approved, could undermine the Affordable Care Act, known as Obamacare, by allowing insurers to cherry-pick their policyholders. The plan’s supporters deny that.

The ruling could scuttle the venture because potential partners won’t join a health-insurance program that lacks the Labor Department’s blessing, experts said. A lawyer behind the plan, Alexander Renfro, said LP Management would seek approval through a pending lawsuit.

“We are disappointed that after 14 months of ignoring our request, and four days before they were required to respond to our lawsuit, the DOL has rushed out an opinion that violates its own rules, ignores the facts presented, and rewrites existing statutes and regulations without a legal basis to do so,” he said in an email.

One executive involved in the health initiative is Arjan “Ari” Zieger, a California man who made a mysterious $1 million loan in 2017 to Trump’s former campaign manager, Paul Manafort. Zieger’s lawyer has said the loan had nothing to do with the insurance venture.

Companies Zieger helps run have spent about $400,000 to lobby the Trump administration on behalf of the plan.

Emails to the attorneys general of Georgia and Louisiana weren’t immediately returned.

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