The Trump administration just dropped new regulations to allow more small businesses and self-employed Americans to buy skimpier health insurance that doesn’t comply with the Affordable Care Act’s regulations — part of the White House’s multi-pronged crusade to undermine the health care law.

These new rules would make technical changes to “association health plans” — a fixation for Republican lawmakers seeking alternatives to the ACA — that would allow more companies and self-employed individuals to join them. They would also exempt the associations from some of the law’s core insurance rules, which Republicans blame for increasing insurance premiums.

The bottom line is that Trump, as ordained in an executive order last fall that led to these new regulations, is looking to carve out more exemptions for people to escape the ACA’s marketplaces and regulations. Health experts fear that this will damage the law’s markets, because the businesses and people most likely to seek out association health plans under these rules, and avoid the ACA mandates, are younger and healthier, leaving behind an older, sicker, and costlier ACA market.

“There are going to be lots of ways for them to cherry-pick healthy people,” Tim Jost, a health law professor at Washington and Lee University who is generally supportive of the ACA, told me, “and it’s going to further deteriorate the individual market.”

Under current law, small businesses and self-employed workers that buy insurance through associations are still subjected to the ACA’s rules that, for example, require that health plans cover certain essential health benefits. The health care law included that provision to stop insurers from crafting skimpy plans that attract only healthier people. But Republicans have said those strict regulations drive up the cost of health coverage.

The Trump administration wants to make it easier for associations to be considered large employers and therefore by exempted from some of the ACA’s rules, including the essential health benefits requirement. They also want to loosen the conditions for small businesses to band together to form associations and for self-employed people to join them.

How Obamacare affected association health plans

An association health plan, as Vox’s Sarah Kliff has previously explained, is a way for a group of small businesses to pool together to buy insurance, giving them more purchasing power and access to cheaper premiums. A group of bakeries, for example, might form a bakers association and purchase health coverage together. The most famous examples have been farm bureaus, which allowed independent farming businesses to band together and get insurance.

Before Obamacare, national associations could pick and choose which states’ insurance rules they wanted to follow and use those rules to guide the plans they offered nationwide. The bakers association could choose to follow the rules for, say, the Alabama insurance market, which mandates coverage of relatively few benefits, for all its bakeries in New York, a state with many mandates.

The result was often health insurance that skirted state rules and was a better deal for businesses with young and healthy employees, who are likely to prefer skimpier health plans. A former insurance regulator described the situation prior to the ACA to Kliff as being “a race to the bottom, with some associations offering lower-cost plans that covered virtually nothing.”

Obamacare changed these rules. Association health plans were treated as small-group or individual plans and were therefore required to cover all of the law’s mandated benefits.

Essential health benefits, requiring that insurers cover everything from hospital care to prescription drugs to maternity care, are central to the ACA’s insurance protections: They prevent plans from crafting their coverage to attract mostly young and healthy customers at the expense of older and sicker people.

The new Trump regulations, explained

The new proposed rules from the Trump administration, which will still need to be finalized, make several technical changes related to ERISA — the federal law that governs employer benefits — that are designed to allow more people and businesses to join associations and to exempt association health plans from the ACA’s regulations.

For starters, the Trump administration wants to make it easier for association health plans to be considered large employers. Under current rules, small businesses and individuals can join associations, but they are still subject to the ACA’s rules governing small-group and individual coverage.

Under the new proposal, more associations would be considered large-group plans and therefore exempt from some of the ACA’s rules — most notably the essential health benefits requirement that health plans cover certain services, like mental health care and pediatric services.

The rule would allow businesses in the same industry but different states to band together as an association and buy coverage, experts said. It would also allow companies in the same geographic area, but not necessarily the same line of work, to form associations.

Nicholas Bagley, a law professor at the University of Michigan who follows health policy, flagged one potential hazard of this change: Associations could “redline” their geographic definitions to exclude certain high-cost areas or employees. Maybe they define their region to cover only a lower-cost urban area and excluding a higher-cost rural area, for example.

“You could imagine lots of creative efforts to define geographic areas to exclude high-cost employees and high-cost areas,” he told me Thursday. “The market dynamics will be complicated, but there will be temptation to do that redlining.”

The other major change would allow more sole proprietors, people who own their own business, to join associations and purchase this large-group coverage that does not have to meet some of the ACA’s mandates. The rule does include some conditions, such as requiring those individuals to work 30 hours per week for a month, to be considered a sole proprietor.

Bagley gave the example of Uber drivers who work more than 120 hours a month defining themselves as sole proprietors and deciding to band together as an association and buy coverage, instead of purchasing insurance through the ACA’s marketplaces.

Under this example, Uber drivers, or other workers in this hypothetical, are more likely to be young and healthy, meaning their exit from the health care law’s markets would leave behind an older and sicker pool, which drives up premiums for the ACA plans.

“That could end up creating a real drain, imbalancing the risk pools in the [ACA] exchanges,” he said.

Bagley also noted that the Trump administration’s regulation prohibits associations from asking too many questions of individuals who want to join their plan, which could further exacerbate that drain on the markets.

“They cannot look behind it and cannot ask for more certification,” he said. “As loopholes go, it doesn’t get any bigger than this.”

The regulation notably does not appear to preempt state regulations, Jost said, which means individual states could take steps to try to mitigate any adverse effects on their health insurance markets.

Going forward, the issue of self-employed individuals might be the most ripe area for legal challenges, Jost and Bagley said. It goes to the heart of what ERISA is supposed to be about.

“That really changes the nature of ERISA, and I think there might be legal challenges based on that,” Jost said. “It’s supposed to regulate group health plans. To say an individual is a group is a bit of a stretch.”