President Donald Trump handed an influential business advocacy group what should have been a historic lobbying victory when he recently rolled out new rules encouraging small businesses to band together to offer health insurance.

Trump, who’s touted the expansion of so-called association health plans as a key plank in his strategy to tear down Obamacare, even announced the rules at the 75th anniversary party of the National Federation of Independent Business last month, claiming the group’s members will save “massive amounts of money” and have better care if they join forces to offer coverage to workers.


But the NFIB, which vigorously promoted association health plans for two decades, now says it won’t set one up, describing the new Trump rules as unworkable. And the NFIB isn’t the only one: Several of the nationwide trade groups that cheered Trump’s new insurance rules told POLITICO they’re still trying to figure out how to take advantage of them and whether the effort is even worth it.

That could signal there’s minimal early interest in an initiative the administration says will help lower health care costs — and one that Trump himself has prematurely hailed as a wild success. Trump falsely claimed during rallies in recent weeks that “millions” are signing up, though the new health plans can’t be sold until Sept. 1.

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Behind the scenes, the NFIB had already been souring on the idea before Trump’s announcement, concluding that establishing an association health plan would be too complex and not worth the effort. The NFIB, which offered only a vague endorsement of the Trump effort last month, now says it’s abandoned any idea of setting up a national plan for its hundreds of thousands of members.

“We can’t set up an AHP under the new rules any more than [we] could under the old rules,” spokesman Adam Temple said.

The NFIB, which typically supports Republican policies, argues that the Trump administration’s sweeping regulations don’t go far enough, failing to eliminate key roadblocks that would prevent diverse organizations like it from creating a nationwide association health plan.

Other trade groups have raised similar concerns. The National Retail Federation said it‘s unlikely to form a national plan due to the “structure of the rule“ and is focusing instead on whether it can help state-level retail groups create their own plans. The National Association of Realtors, which had long lobbied for expanding association health plans, said it’s working with health insurance experts and providers to understand the new rules, but downplayed the idea of starting one anytime soon.

“The development of an AHP will be a long process, and at this time we do not have a definitive timeline,” said Wesley Shaw of the Realtors group.

Even in some red states, state regulators have voiced skepticism and taken steps to limit association health plans, pointing to their history of lax regulation and fraud before Obamacare set more stringent insurance standards. And further clouding the future of Trump’s big health care idea is the threat of legal challenges from blue states, which also fear the new policy will siphon healthy customers from the Obamacare insurance markets.

The Labor Department, which issued the new rules, did not respond to a request for comment.

The NFIB has specifically blamed restrictions under the new rules that allow businesses to band together to purchase health coverage only if they share an industry or are located in the same state. That’s a disqualifying factor for the NFIB, whose membership spans hundreds of thousands of small businesses across varying industries.

“You can’t set up an industry-specific association just because you’re a small employer or just because you’re a small employer who believes in business,” said Chris Condeluci, a benefits lawyer and former GOP staffer on the Senate Finance Committee. “You have to have some kind of nexus.”

The NFIB could still choose to set up association health plans in each state and meet the new rule’s geographic requirements — an idea the group said it’s still exploring.

But interest in the association health plan concept among the group’s leadership waned well before the Trump administration’s expansion, said several people familiar with the NFIB’s high-level discussions who requested anonymity to freely discuss the group’s thinking.

“They’ve essentially abandoned a core health care initiative that was a cornerstone lobbying effort for two decades,” said one person familiar with the NFIB’s inner workings.

That change was driven largely by NFIB CEO Juanita Duggan, three people close to the trade group said. Duggan, who took over in 2016, quickly narrowed the group’s policy priorities, focusing much of its firepower on shaping Republicans’ successful bid to enact sweeping tax cuts.

Duggan has consistently questioned the idea of setting up an association health plan, arguing it would be too costly and generate too little benefit for the NFIB, according to three people familiar with the high-level internal discussions. She also questioned whether operating such a health plan would fit with the advocacy group‘s core mission, one person said.

That opposition alarmed some within the NFIB who worry that failing to set up an association health plan risks angering the NFIB’s members and sparking a defection to competing trade groups offering the coverage. The NFIB’s membership has consistently ranked health care costs as its top issue, according to multiple sources familiar with the organization’s internal polling.

The NFIB’s membership has fallen in recent years to roughly 300,000, down from about 350,000 in 2014 and nearly 600,000 during George W. Bush’s presidency. Some NFIB board members and staffers have argued the group could reverse the membership decline by offering an association health plan, a person familiar with the internal discussions said.

“It’s very competitive out there,” said one person familiar with the NFIB’s inner workings. “What are we going to continue to draw people in with?”

In an email, Temple of the NFIB disputed any suggestion the group is not forming an association health plan because of Duggan’s opposition. Rather, he said the administration’s narrow new rules for national trade groups effectively killed any possibility of NFIB establishing a national plan.

Still, the NFIB’s refusal to set up an association health plan marks a major turning point for a group that spent nearly 20 years aggressively lobbying on the issue.

In the early 2000s, it steered a coalition of more than 80 business groups pushing legislative efforts aimed at letting small businesses purchase health insurance from trade associations.

“AHPs will allow small business owners to band together across state lines through their membership in bona fide trade associations, like NFIB, to purchase health coverage for their families and employees,” the NFIB wrote in a 2003 report that ranked association health plans as a top priority.

The NFIB later unsuccessfully pressed Democrats to include association plan language in Obamacare during the law’s drafting. The group ultimately emerged as one of Obamacare’s staunchest opponents, leading a challenge to the law that the Supreme Court rejected in 2012.

The organization still advocates repealing and replacing the health care law with a more free-market system that relaxes regulatory constraints on small businesses.

But those close to the NFIB said the organization’s lukewarm official response to the Trump administration’s new association health plan rules spoke volumes about its flagging interest in the idea it long championed.

“That’s a far cry from the full-court press,” said one person close to the group. “NFIB mobilizes when it wants to.”