A long-running lawsuit challenging the definition of an employee and access to work-based health plans is being closely watched by health policy analysts, as its outcome could lead to the availability of lower-cost but potentially less robust health coverage that skirts some consumer protections. The plaintiff, Data Marketing Partnership, filed its case against the Department of Labor in 2019, during the first Trump administration. It wants official recognition as an employer so it can continue to allow its limited partners to buy into a type of job-based health insurance that doesn’t have to comply with state insurance rules or offer coverage as robust as required under the ACA.
Court papers indicate a settlement in the case may be in the works, although the parameters of any such deal are unknown. This development comes amid premium surges on ACA marketplaces that have led millions to drop coverage this year. The Trump administration has been focused on expanding access to alternative coverage, such as short-term plans that avoid ACA rules on preexisting conditions and benefit requirements.
“Depending on what happens with the settlement, this could be an even bigger expansion,” said Katie Keith, director of the Center for Health Policy and the Law at the Georgetown University Law Center.
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Understanding the Coverage
To grasp the claim, one has to understand how the coverage works. A consumer shopping for health insurance may come across information online or from a marketer about this concept, sometimes called “limited partnership” coverage. The pitch is to buy insurance offered through Data Marketing Partnership and handled by LP Management Services. To qualify, the consumer must download an app that tracks their internet searches. The company could then sell that data.
Some potential consumers may be turned off by the thought of their internet searches being tracked, but others may find it appealing because it allows them to become a limited partner eligible to buy into the company’s employee health insurance plans. But can these partners be considered employees? The court’s answer has potential implications for regulators and consumers, as some health policy and market experts warn that a green light could lead to a proliferation of aggressively marketed and potentially questionable insurance with limited recourse for consumers.
“If this took off, you logically could see the rise of a whole bunch of what, functionally, would be unregulated insurance companies,” said Ali Khawar, who was the principal deputy assistant secretary of the Department of Labor’s Employee Benefits Security Administration during Joe Biden’s presidency and now runs his own consulting outfit. “If this took off, you logically could see the rise of a whole bunch of what, functionally, would be unregulated insurance companies,” he said.
State Actions
States have taken action against purveyors of limited-partner policies. Maryland in 2024 fined a company, The Vitamin Patch, for offering limited-partnership insurance after investigating complaints and determining it was not licensed to sell coverage in the state. Washington in 2021 ordered another company to stop offering its plans in the state and fined it $25,000. Maine and Connecticut in 2024 warned consumers about this type of coverage, noting that these plans do not provide medical coverage that is as thorough as other plans and can leave consumers with large, unpaid medical bills.
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State insurance commissioners filed legal arguments in the Department of Labor case, citing their concerns about losing the ability to enforce consumer protections. “This is not a Republican-Democrat thing,” Khawar said. “It’s really a story about state authority, the way such authority would be significantly undermined in insurance markets.” The case has significant implications for the future of health insurance, and the outcome could have far-reaching consequences for consumers and regulators.
In court filings, however, Data Marketing said that without an employer designation, it would have to end the insurance coverage, affecting about 50,000 policyholders. Ellen Montz, who helped oversee ACA implementation in the Biden administration, had a different take, saying that the only reason why these sorts of products exist is because they aren’t beholden to consumer protection rules of the ACA and can essentially make money by attracting good risk, people who are healthy. Maryland’s insurance commissioner, Marie Grant, echoed this warning, saying that proliferation of such plans could lead to even higher premiums in the ACA markets.
Nineteen patient advocacy groups sent a letter to the Department of Labor Aug. 11 urging it to continue its defense in the case, warning that a settlement that says such arrangements create an employer-employee relationship could “significantly” undermine “both state regulatory authority and decades of bipartisan efforts to promote stable, well-functioning health insurance markets.” The Department of Labor has not changed its stance, and the administration’s view on limited-partnership health plans remains unclear, as neither the White House nor the Centers for Medicare & Medicaid Services responded to questions about the case.
