Blue Cross of Idaho submitted five health plans to Idaho insurance regulators on Tuesday that do not comply with the Affordable Care Act (ACA), according to local reports. The move has serious repercussions on people’s health care — and if the Trump administration allows the state to bypass the federal health law, other states could soon do the same.
If approved, Blue Cross of Idaho will begin selling plans in March that charge people with pre-existing conditions and older residents significantly more than currently allowed under the ACA. The plans, called “Freedom Blue,” would also have an annual limit on coverage and wouldn’t cover maternity care. Idaho became the first state to allow insurance companies to sell “state-based plans” traditionally banned by the ACA in January, the Wall Street Journal first reported.
The Trump administration is currently monitoring the situation in Idaho, a Department of Health and Human Services (HHS) spokesperson told ThinkProgress in an email. Idaho officials have not formally asked HHS to approve such changes.
“HHS is committed to working with states to give them the flexibility to provide their citizens the best possible access to healthcare, within the bounds of the law,” the official added. When HHS Secretary Alex Azar was asked about Idaho’s situation during a House budget hearing on Wednesday, he told members of Congress: “There are rules. There is a rule of law that we need to enforce.”
Blue’s non-compliant plans are trying to offer people a low-cost choice. But while these plans are cheaper, it’ll come at a cost to the state’s unhealthy population, especially those with pre-existing conditions.
The move has serious ramifications because of the way the entire ACA marketplace works. At the core of the ACA marketplace is a “three-legged stool” approach: insurers can’t deny or charge people more for health care, everyone needs to have insurance, and federal subsidies will make this coverage affordable. Congress repealed the mandate last year, effective 2019, but Idaho’s plan undermines the state exchange this year.
If healthy people choose to buy Blue Cross of Idaho’s cheaper plans — and why wouldn’t they? — this will affect the rest of the marketplace, which suddenly has to cover a higher proportion of sick people.
“What Idaho is doing is creating a parallel insurance market that will siphon off healthy people with cheaper premiums,” said Kaiser Family Foundation’s Larry Levitt on Twitter. “That will inevitably lead to higher premiums in ACA-compliant plans.”
Legal experts believe health plans like Blue Cross of Idaho’s violate the current health law, and open themselves up to lawsuits. After Idaho’s announcement in January, ACA expert and University of Michigan law professor Nicholas Bagley called these plans “crazypants illegal“. Still, the insurer is “confident we have clear guidance from our local regulator,” Dave Jeppesen, an executive vice president at Blue Cross, told the Wall Street Journal.
If Blue Cross of Idaho’s plans are approved, other insurers in the state could also look to sell non-compliant ACA health plans. Other conservative states could also follow Idaho’s example and allow for similar plans.
The four insurers in Idaho offering 2018 health plans on the exchange increased premiums statewide by 28 percent, on average. People who qualify for federal subsidies are safeguarded from these rate hikes, but those making at least 400 percent of the federal poverty level have been paying the full premium price.