What is going on in Idaho’s individual health insurance market?
Idaho is going rogue on Obamacare.
The Republican-led state has a maverick plan to flout the federal health care law, letting insurers sell plans that don’t meet Obamacare coverage rules and patient protections….
The state’s largest insurer, Blue Cross of Idaho, announced Wednesday it has five “state-based” plans that it wants to get approved and on the market by April. They will be cheaper than Obamacare plans but won’t provide as robust benefits or protections for people with pre-existing conditions.
Mechanically, Idaho is attempting to implement the Cruz amendment from the 2017 summer Senate repeal and replace bill. The Idaho rule is that as along as an insurer also offers an ACA plan, they can offer underwritten plans with life time limits and benefit caps as well to the individual market.
This is aimed at bringing down premiums for healthy non-subsidized buyers. It will be a better deal for 24 year old men who won’t be buying plans with maternity coverage. It will be a far worse deal for individuals with significant health needs and who don’t qualify for a subsidy as the underlying risk pool in the ACA markets will get worse and premiums will go up. It will not meaningfully matter to people who qualify for subsidies and are happy with what they get right now.
The core problem is that this is wildly illegal. ACA legal expert Nick Bagley comments:
These Idaho guidelines for health insurers are crazypants illegal. It’s not even close. Does Idaho think the Supremacy Clause doesn’t apply to it? https://t.co/zexBGLAxQ3
— Nicholas Bagley (@nicholas_bagley) January 25, 2018
The only individual market full year insurance plans that are allowed to be underwritten and to offer limits are the grandfathered and the grandmothered plans. All other plans that were first offered on the market after 1/1/14 must comply with ACA rules, and most plans offered before 1/1/14 and after the signing of the bill also comply with those rules. The state insurance department is the first regulator. If the state does not knock back illegal plans, then CMS has an obligation to do so.
The new Secretary of HHS has been asked about that and it seems like CMS is looking into what Idaho is doing. Given that CMS’s political leadership is against enrollment but open enrollment went mechanically well, I will not be surprised if there is a letter being drafted right now that goes like this:
We know that you want to do something to help the people who are priced out of the insurance market. That’s cool. We want to help states customize their own marketplaces.
However the current plan is bananapants illegal so knock that shit off. Insurers participating in something this ludicrous are placing themselves at risk of fines up to $100 per member per day.
Let’s talk about your 1332/1115 proposal next week.
CMS Legal staff
If that letter is not being written, then someone else will sue to stop the selling of these non-compliant plans. Other Idaho ACA insurers are basically being dared to either all participate in this scheme or sue as the non-compliant plans will take away a significant portion of their off-Exchange good risk mid-year which is a negative material financial event.
So the TLDR: There will be a lot of lawyers soon.