The director of the Idaho Insurance Department, Dean L. Cameron, gave a green light to noncompliant “state-based health benefit plans” in a bulletin issued Jan. 24.
The Trump administration said this bulletin contravened the Affordable Care Act in several ways. It would allow insurance companies to charge higher premiums to people with pre-existing conditions. People with such conditions could be denied insurance for up to 12 months if they had not maintained “continuous prior coverage.” Insurers could impose caps on the dollar amount of benefits available to consumers.
And insurers would not have to provide all of the “essential health benefits” required by the Affordable Care Act. For example, the Trump administration said, Idaho insurers could, in some cases, omit coverage of maternity care and of dental and vision care for children.
Ms. Verma said that Idaho had other options and could perhaps achieve much of what it wanted to do under a regulation proposed last month by Mr. Trump.
The proposed rule would make it easier for insurers to sell “short-term, limited-duration insurance” policies. Mr. Trump wants to widen access to such insurance, which he said was “exempt from the onerous and expensive insurance mandates and regulations” in the Affordable Care Act.
Under current rules, issued by the Obama administration, such short-term policies cannot last for more than three months. Under the Trump administration’s proposal, the limit would be 364 days.
In addition, the Trump administration believes that consumers should be able to renew such insurance policies, increasing the likelihood that they could be used as a substitute for major medical coverage that complies with the Affordable Care Act.
Ms. Verma said she understood the difficulties facing consumers and insurers in Idaho. For people who do not receive federal subsidies, she said, premiums for coverage sold through the Idaho insurance exchange increased more than 90 percent from 2014 to 2018, and Idaho insurers have been losing money in the individual insurance market — a total of more than $300 million since 2014.
And she blamed the Affordable Care Act, saying it had “damaged health insurance markets across the nation, including Idaho’s.”
From one point of view, the Trump administration was reluctantly upholding the supremacy of federal law.
But Senator Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, was not impressed.
“The Trump administration is talking out of both sides of their mouth,” Mr. Wyden said. “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.”
Democratic members of Congress and some groups representing patients, like the American Heart Association, the American Diabetes Association and the lobbying arm of the American Cancer Society, have denounced the Idaho plan.
They fear that premiums will soar for people with serious medical problems as healthy consumers buy cheap state-based plans while less healthy customers are left in the Affordable Care Act marketplace.
In an executive order in January, Mr. Otter, the governor, explained why he wanted to allow lower-cost options even if they did not meet all the requirements of the Affordable Care Act.
“I have always opposed the overreaching, intrusive nature of Obamacare and its infringement on Idahoans’ freedoms and the traditional prerogatives of the state on health care and insurance issues,” Mr. Otter said.
Blue Cross of Idaho has submitted five new health plans for review and approval by state insurance regulators. Anthony F. Shelley, a Washington lawyer representing Blue Cross of Idaho, recently presented its case to the Trump administration in a letter asserting that the Idaho initiative was “entirely legal.”
“Congress left to the states the power to enforce the Affordable Care Act in the first instance, including some leeway to relax A.C.A. requirements,” Mr. Shelley said. State officials have some discretion to deviate from the “strict terms” of the federal health law, he said.
Enforcing the letter of the law for all individual insurance policies in Idaho “has had the perverse consequence of subverting, rather than furthering, Congress’s goal of covering the uninsured,” Mr. Shelley added.
Ms. Verma said her agency would become the “primary enforcer” of federal insurance standards in Idaho if the state did not “substantially enforce” these requirements.
The federal government could then order a halt to the sale of noncompliant insurance policies, she said, and any insurer that continued to sell such policies would be subject to a maximum penalty of $100 a day for each person affected by the violation of federal standards.
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