Idaho Bucks Federal Law in New Health Insurance Proposal

Health Insurance

January 30, 2018

People without health insurance in Idaho might have new options available this spring thanks to an executive order signed earlier this month by Governor Butch Otter. The order, which is seen as “pushing the envelope” in terms of complying with federal law, would allow health insurance companies in the Gem State to sell plans that don’t meet Affordable Care Act (ACA) standards, including charging people with pre-existing conditions more for coverage and reinstating annual payout limits.

On January 24, Dean Cameron, the state’s insurance director, issued a bulletin outlining the guidelines that carriers are to follow in creating so-called state health plans in Idaho, which critics fear will undermine the ACA, also known as Obamacare, and lead other states down the path of undermining federal law. Under the ACA, major medical plans must include 10 essential benefits, prevent insurers from refusing people with pre-existing conditions and limit out-of-pocket spending, among other provisions. Insurers in Idaho now have the option to create plans that directly contradict federal law as long as they also offer one ACA-compliant plan on the state’s individual marketplace.

Idaho is one of 12 states, including the District of Columbia, to host its own state-based marketplace for individuals to purchase health insurance. Companies that opt to create a state health plan on the Idaho exchange must declare that the policy does not qualify as federally compliant.

In a separate effort, Gov. Otter and Lieutenant Governor Brad Little have proposed an “Idaho Health Care Plan” that includes two waivers designed to provide coverage for the state’s uninsured population. On January 15, the Idaho Legislature undertook a special hearing on the waivers. The first would allow low-income Idahoans who don’t qualify for Medicaid or marketplace subsidies to apply for subsidized health insurance on Idaho’s exchange. The second would temporarily allow a small portion of residents with serious and costly medical conditions to be enrolled into the state’s Medicaid program during their treatment.

Approximately 35,000 Idaho residents fall into a coverage gap created by the ACA in which people earn too much money to qualify for Medicaid but not enough to meet subsidy requirements, making private health insurance unaffordable. Idaho is one of 17 states that did not expand its Medicaid program under Obamacare guidelines.

Cameron, the state insurance director, argues that allowing carriers to sell cheaper plans that don’t fully comply with ACA law will bolster enrollment in Idaho and keep costs down. Because insurers must still share a risk pool among compliant and noncompliant plans, rates should go down across the board. According to Cameron, noncompliant plans might cost 30 to 50 percent less than their comprehensive counterparts. Around 250,000 people in Idaho currently lack health insurance of any kind.

Idaho’s new state plans could impose limits on insurance payouts, require people with pre-existing conditions to maintain continuous coverage or be denied coverage if they go without insurance for 63 days or more, charge higher premiums based on age or location, and impose separate maximums on out-of-pocket spending. Cameron’s bulletin outlines minimum essential coverage requirements for these plans, such as preventive care, maternity care and mental health services, but gives carriers flexibility in creating plans that go against ACA stipulations.

Legal experts question whether Idaho has the authority to allow carriers in its state to defy federal law. Given the Trump administration’s obvious disdain for the Affordable Care Act and its willingness to undermine the law at the federal level, it’s not surprising that states would attempt to follow suit. Double-digit premium hikes in 2018, a mass exodus of insurers from the individual marketplace and continued uncertainty over the direction of healthcare reform are no doubt adding fuel to the fire in state decisions to thwart ACA guidelines.

The Department of Health and Human Services (HHS) has the legal authority to force states to comply with federal guidelines, but if HHS fails in this regard, it would be up to the executive branch – President Trump – to ensure that Idaho follows federal law. It remains to be seen how far the current administration will go in supporting state efforts to challenge Obamacare. It’s also unclear how many carriers are willing to create coverage options that directly violate federal law, even if Idaho gives them the all-clear to move forward with noncompliant plans.