NAILED IT: Iowa decides the solution to their individual market woes is to offer #JunkPlansForAll!*
*(except people who are actually sick, that is) --h/t Anne Paulson
I've written a lot about Idaho's decision to simply ignore ACA regulations by allowing non-ACA compliant healthcare policies which would destabilize the individual healthcare market even worse than it already is today.
A couple of weeks ago, University of Michigan law professor and ACA expert Nicholas Bagley explained how the bigger danger here is that if this move is allowed to stand, it won't be limited to just Idaho:
But it would be a mistake to ignore what Idaho is up to. If the Trump administration doesn’t intervene, other red states will surely follow in its footsteps. The result will be widespread disregard of the law and the rise of state-to-state inequalities in the private market similar to those that already exist in Medicaid.
And don’t count on the courts: They’re more likely than you might think to sit this one out. Idaho could help red states achieve what congressional Republicans have only dreamed of: the covert repeal of some of the ACA’s most crucial protections. As Idaho goes, so goes the nation.
Bagley goes on to reiterate that what Idaho is doing is very much illegal:
Instead, what’s worrisome is that Blue Cross of Idaho intends to disregard its own obligation to comply with federal law. The ACA prohibits all insurers in the United States from discriminating against the sick and imposing annual caps, and states have no power to undo those prohibitions. So Blue Cross knows full well that it will be breaking the law if it takes up Idaho’s invitation. It just thinks it’ll get away with it.
Ironically, the actions of President Obama himself may have set the precedent here:
Unfortunately, Blue Cross might be right. There’s some bad precedent on the books. When President Obama came under fire for breaking his promise that “if you like your health plan, you can keep it,” his administration told states that they could allow insurers to sell “grandmothered” plans that violated ACA rules. That too was illegal, as I said at the time. But the Obama administration went ahead anyhow, which may have made it easier for the Trump administration to turn a blind eye to what Idaho is doing.
I've written a lot about the "grandmothered" or "transitional plan" allowance that President Obama's HHS Dept. implemented in response to the "you can keep it" backlash. Now, I'm not a lawyer, so the legality of this move is outside my wheelhouse, but back in 2015 I did say:
... the fact remains that from an acturial POV, it would have been much better if President Obama had stuck to the original rules and pulled the band-aid off all at once. Hell, even politically it probably would've been smarter; after all, it's not like spreading things out did his party any good in the 2014 mid-terms, where they still had a terrible year.
Well, now there's another reason why he should've taken the heat then instead of looking for an easy way out:
If Idaho moves forward and other states follow its lead, what will emerge is a gray market in noncompliant insurance coverage, not unlike the gray market in legalized marijuana. Indeed, the marijuana analogy fits neatly. In both cases, state officials have purported to legalize conduct banned by federal law; in both cases, federal officials have been reluctant to enforce a law they disagree with.
And as with marijuana, what starts in one state will spread. As floutings of federal law go, Idaho’s approach is pretty measured. Under its rules, insurers that sell noncompliant plans must also sell compliant plans, the unhealthy can “only” be charged 50 percent more than the healthy, and insurers must cover preexisting conditions (unless there’s a gap in coverage, in which case they don’t).
But other red states that follow Idaho’s lead may not be so restrained. They might allow insurers to ditch their ACA-compliant plans, to exclude any and all preexisting conditions, or to jettison coverage for mental health care. Red states could take us back to the harsh pre-ACA state of affairs, and all without the need for congressional action.
About a month ago, Wellmark, one of the largest insurance carrier on the individual market, suddenly announced that after jumping into the individual market in 2017 and jumping out in 2018, they've decided to jump back in again for 2019:
Therefore, today we are announcing several options to provide individual and family coverage in Iowa. Our members, our agents, and most recently Governor Kim Reynolds and Iowa Insurance Commissioner Doug Ommen, have asked Wellmark to offer individual and family coverage in this market.
I noted at the time that some of the wording in the press release sounded awfully forboding:
To that end, we will offer fully ACA-compliant products on the public exchange for 2019, assuming there aren’t any significant changes to the Affordable Care Act. We will also explore offering additional options outside of the ACA for Iowans, if state and federal rules allow us to do so.
While there is no singular solution to stabilize the entire individual market in 2019, Wellmark will seek to offer options that provide more choice and affordability to Iowans than they have today. Wellmark believes the individual market can be functional once again. We pledge to continue working with state and federal officials, business partners, and other stakeholders to find a solution for all Iowans in the individual and family insurance market.
Well, now...that's pretty ominous. Sounds to me like Wellmark may be in cahoots with the Governor & Insurance Commissioner to try and push something along the lines of what Idaho Governor Butch Otter (yes, that's the name he goes by) is trying to pull. That might explain their sudden about-face on jumping back into the exchange in the meantime. Then again, it might not be anything as nefarious as that. Stay tuned...
Well, sure enough, just yesterday the Iowa state Senate voted to allow unregulated junk plans to be sold to...pretty much anyone in the state:
The Iowa Senate voted Wednesday to let the Iowa Farm Bureau Federation and Wellmark Blue Cross & Blue Shield sell health insurance plans that don't comply with the federal Affordable Care Act.
The new coverage could offer relatively low premiums for young and healthy consumers, but people with pre-existing health problems could once again be charged more or denied coverage.
The bill passed 40-9 and now goes to the House. It would affect people who need to buy individual health insurance policies instead of coverage via an employer or government program, such as Medicare or Medicaid. The cost of such policies have been skyrocketing, especially for people who make too much money to qualify for Affordable Care Act subsidies.
Yes, I absolutely agree this is the most pressing flaw of the ACA: The 400% Federal Poverty Level income cut-off for premium tax credit subsidies. A problem which could be easily fixed by simply removing the 400% cap, as has been proposed twice now in both the Senate and the House.
Feenstra said anyone excluded from the new plans because of a pre-existing health problem could go and buy policies from a carrier offering insurance that complies with the Affordable Care Act. But for others, he said, the new plans would offer a less expensive option.
The cluelessness of Rep. Feenstra about how health insurance and risk pools work is incredibly depressing. For one thing, the ACA's Open Enrollment Period is still in effect (with good reason), which means that anyone shut out of the junk plans had better hope they discover this between Nov. 1st and Dec. 15th, because if it happens outside of that window they're screwed. Worse, of course, is that if they earn more than 400% FPL, they'll have no chance of affording an ACA compliant plan because of the skyrocketing premiums caused in large part by healthy people moving onto these junk plans.
But critics fear the change would further destabilize Iowa's already fragile health insurance market and undermine Affordable Care Act rules designed to protect consumers.
So how on earth can these types of "insurance policies" be considered legal under the ACA? Simple: They aren't insurance policies.
But several Democrats noted the new coverage would technically not be defined as health insurance, and would not be regulated by Iowa's insurance commissioner.
Sen. Michael Breitbach, R-Strawberry Point, said he would prefer the new plans be regulated as insurance, but he said if they were defined as insurance, they would have to follow Affordable Care Act rules. He said he has faith in Wellmark and Farm Bureau to offer solid plans for people in desperate need of health coverage.
If they were solid plans, they'd be regulated as insurance.
The Iowa Farm Bureau Federation estimates about 28,000 of its current members could take part in such a plan, many of whom are farmers who buy their own health insurance. But anyone can join the Iowa Farm Bureau if they pay annual dues of $55 or less, making the option available to almost anyone in the state.
Not everyone is happy about this...
The bill's registered opponents include the National Multiple Sclerosis Society-Upper Midwest Chapter; American Cancer Society Cancer Action Network; the Medica insurance company; and the Child and Family Policy Center.
...with good reason.
...Currently, Medica is the only insurer selling individual policies in Iowa. About 46,500 Iowans purchased such health insurance for this year. That's down from about 72,000 last year.
Around 53,000 people actually selected Qualified Health Plans via HealthCare.Gov during the 2018 Open Enrollment Period, which is actually up about 3% from 2017. 46,500 of them are actually enrolled and effectuated, which sounds about right (around 10% of enrollees never pay their first monthly premium, and there's gradual net attrition throughout the year). This suggests that the equivalent number in 2017 was around 45,000 effectuated exchange-based enrollees...which in turn means that last year around 27,000 people enrolled in off-exchange policies.
In other words, if I'm reading this correctly, Iowa's off-exchange (and unsubsidized) ACA-compliant market has almost completely disappeared this year. Why? Again, because very few middle-class people can afford to pay full price for compliant plans anymore in Iowa.
I absolutely agree with the problem...but the proposed solution goes in the exact wrong direction.
About 41,700 of Medica's Iowa customers have incomes low enough to qualify for Affordable Care Act subsidies, which help pay their health-insurance premiums. The new Farm Bureau plans would not qualify for such subsidies.
Last year only 86% of exchange enrollees were subsidized, or roughly 39,000 people...but when you add the off-exchange market to the mix, that's just 54% of Iowa's ACA-compliant market who were subsidized. This year it's up to 90%.
A national expert said the consumers most likely to benefit from the proposal are young, healthy Iowans who make too much money to qualify for Affordable Care Act subsidies.
...which is exactly why this move will make the problem even worse. Those young, healthy Iowans are the only ones helping prevent ACA-compliant premiums from shooting up even more than they already are. Siphon them off and watch ACA rates double, triple or even more within a year or two.