Trump Administration Stops State's Bid to Skirt Obamacare Rules

(Bloomberg) -- The Trump administration on Thursday rejected a plan by Idaho insurance regulators to sell health plans that don’t carry some of the consumer protections required by the Affordable Care Act.

In January, Idaho regulators said they would let insurers in the state sell health plans that don’t cover pre-existing conditions and that do allow them to charge sick people higher premiums. Obamacare bars such policies, and the head of the agency that oversees the health law said she would reluctantly enforce the letter of the law.

“If a state fails to substantially enforce the law,” Washington must do so, Seema Verma, administrator of the Centers for Medicare and Medicaid Services, wrote in a letter to Idaho’s Republican governor. “This is certainly not our preference; we believe that Idaho has options within the law” to make room for the kinds of insurance policies it proposed.

Idaho’s proposal has put the Trump administration in a position it has found itself in before: charged with upholding a law it wants to get rid of, and that it has taken active steps to dismantle.

Verma left open the possibility that plans like the state was proposing could be sold in a different form. If they were offered as short-term policies instead of annual coverage, they might be allowable, she said. The administration has pushed short-term plans as a way to offer consumers less expensive, less comprehensive options.

Workaround

In her letter to Idaho authorities, Verma said that “with certain modifications, these state-based plans could be legally offered” as short-term plans. The White House has suggested to Congress that people should be able to renew short-term plans without being subject to medical underwriting, the process by which insurers can exclude or charge more for pre-existing conditions.

Senator Ron Wyden, an Oregon Democrat who has opposed efforts to repeal or roll back the law, criticized the administration’s stance.

“While they claim to be upholding the law, they are explicitly inviting Idaho and other states to sell short-term, junk insurance -- the exact opposite of the protections put in place by the Affordable Care Act,” Wyden said in a statement.

Republicans in Congress repeatedly failed to repeal many parts of the Affordable Care Act last year, and some states have discussed taking steps to roll back the law on their own.

In January, Idaho Governor Butch Otter, a Republican, issued an executive order directing state regulators to approve plans “even if not all PPACA requirements are met,” referring to the Patient Protection and Affordable Care Act. The state’s Blue Cross plan said soon after that it would offer a “Freedom Blue” policy that would come with annual limits on care and that would charge more to less healthy people.

Proponents of the ACA argue that expanding access to health insurance policies that don’t comply with the law will siphon healthy people out of marketplace. That would raise costs for the people who remain. The Urban Institute estimated last month that Trump’s plan to loosen rules on health insurers could push up premiums for comprehensive plans by double digits next year.

Representatives for Blue Cross of Idaho and for Governor Otter had no immediate comment.

To contact the reporter on this story: John Tozzi in New York at jtozzi2@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Peter Blumberg

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