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By Alex Ruoff
Iowa is testing how far the Trump administration will go in its promise to be flexible with Obamacare’s rules for doling out federal insurance subsidies.
Iowa is looking to create a temporary, standardized health insurance policy sold by companies including Blue Cross Blue Shield of Iowa to stabilize the state’s troubled individual insurance market and prevent as estimated 22,000 Iowans from abandoning the state exchange.
The proposed changes will test the Affordable Care Act’s waiver guardrails, which prohibit states from making changes that might undermine the health law’s protections for people with health conditions or result in fewer people having insurance, health policy analysts told Bloomberg BNA. Federal officials promised in March to be more flexible with these waivers.
If Iowa’s proposal is approved, more states are likely to follow in its footsteps by implementing policies meant to draw more insurers to the individual market and extend assistance to some seeking coverage at the expense of others. This will come as Congress debates whether to make it easier for states to make such changes.
“If it gets approved I think that’s a signal to other states the administration is willing to take a pretty liberal interpretation of this waiver authority,” Brad Wright, a professor of health policy at the University of Iowa, told Bloomberg BNA.
A Senate panel in September will hold two back-to-back hearings to discuss ways to stabilize insurance markets around the country, including possible changes to the ACA’s rules on waivers, with an eye toward giving states more leeway. The Iowa waiver, and similar ones, could also serve as a model for lawmakers.
Iowa’s request comes a week after Oklahoma submitted a similar one. Both states have asked the Department of Health and Human Services to rule on their waivers in just a few weeks, to give them time to implement the changes ahead of the 2018 open enrollment period that starts Nov. 1.
Since the waivers became available this year, the government has approved them for Alaska and Hawaii. Alaska was permitted to use federal funds for a reinsurance program that pays insurers who cover people with high-cost health conditions. Minnesota has sought to create a similar reinsurance program.
Iowa state officials Aug. 22 announced they submitted a waiver request to the HHS for these changes. The state’s individual health insurance market has “collapsed” and the Affordable Care Act’s rules need to be adjusted to help the roughly 28,000 people in the state’s individual market who aren’t eligible for federal assistance, Iowa Insurance Commissioner Doug Ommen said in a statement.
“We are proposing a better option for Iowa that stabilizes our individual health insurance market and reduces the devastating impact of the ACA on the families who have worked their way into the middle class,” he said.
Insurer Wellmark Blue Cross and Blue Shield, which withdrew from Iowa’s market earlier this year, indicated it may again offer coverage in the state in 2018 if the waiver is granted. Medica, the only issuer of plans on Iowa’s individual market, has indicated it would ask for a lower premium increase for 2018 under the waiver, according to the state’s waiver request.
Several states have looked into making changes similar to the ones proposed by Iowa, Rosemarie Day, a health policy consultant who’s worked with state insurance groups, told Bloomberg BNA. The proposals could bring more insurers to the markets and benefit middle-class Americans, she said, a major policy objective for both state and federal lawmakers.
A fixed, per-person per-month subsidy for everyone in the individual market based on broad income and age categories, like Iowa is seeking, as opposed to the ACA’s standard, capped tax credits that increase if premiums increase could bring more middle-class Americans into the individual health markets, she said. Those getting no insurance support now could get as much as $199 per month in insurance support under the proposal.
This change has a political advantage by spreading the support among more voters, Day said. It has the disadvantage of putting added costs on those who make just enough money to be ineligible for Medicaid, she said.
“States can’t get more money, so there’s going to be trade-offs,” Day said.
The major trade-off is that Iowa would eliminate the ACA’s cost-sharing reductions, which seek to shield some of the poorest people on the individual market from rising deductibles and other out-of-pocket costs. These people would also no longer be protected from premium increases.
These proposed changes challenge the health law’s waiver guardrails, which prohibit states from altering insurance rules in any way that makes insurance less affordable or comprehensive, meaning states can’t allow cheap, “skinny” insurance with limited coverage, Kevin Lucia, a research professor at Georgetown University, told Bloomberg BNA.
The rules were put in place to ensure states can’t undermine the ACA’s protections for people with pre-existing health conditions, he said.
“You can’t waive everything,” Lucia said.
Iowa, in its waiver request, argued its changes may add costs for some but also reduces costs for others. The state’s request also projects the waiver would broadly lower insurance premiums in 2018, making insurance more affordable.
Congressional Republicans have repeatedly sought to overhaul the ACA’s waiver rules, found in Section 1332 of the health law. Lawmakers are expected to again debate changes to these rules as part of a market stabilization bill.
Both the Senate and House ACA repeal bills would have altered the health law’s waiver rules to permit states to change what’s covered by subsidized health plans, allowing insurers to cut services like maternity and mental health coverage. Democrats balked at these changes, saying they would make insurance unaffordable for anyone with a history of illness.
Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor and Pensions Committee, has long supported altering the ACA’s Section 1332 waiver process to make it easier for states to be granted one and to give states more options in what can be waived.
The process currently permits states to alter the health law’s requirements for the insurance marketplaces and the individual and employer mandates, as well as rules for what health services insurance subsidized by the federal government must cover, as long as the changes don’t lower enrollment or make coverage less affordable or comprehensive.
A bipartisan group of lawmakers in July floated a plan that included making technical changes to the waiver process and calling on the HHS to issue guidance on how it will grant future waivers.
The group is considering ways to speed up the wavier process by shortening the federal review process and removing the ACA’s requirement that state legislatures approve the waivers ahead of seeking federal approval, a staffer with the Problem Solvers, the bipartisan House group, told Bloomberg BNA Aug. 23.
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Iowa's waiver request is at http://src.bna.com/rUW.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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