Iowa is abandoning its quest to shed major elements of the Affordable Care Act, after federal health officials failed to approve the plan in time for the insurance-buying season that begins in just over a week.
The state's withdrawal comes two months after President Trump telephoned a top federal health official with instructions to reject Iowa's proposal.
In announcing the withdrawal of what the state has called a crucial "stopgap" plan to prevent its marketplace from collapsing, Iowa Gov. Kim Reynolds (R) on Monday did not mention the president's intervention, instead thanking Trump for trying to repeal the ACA and blaming the law itself for what she called its inflexibility.
The decision adds to turmoil surrounding the sign-up for 2018 coverage in the state that had gone further than any other in trying to jettison ACA rules and create an alternative for residents to buy insurance on their own. Iowa officials already had readied state computers for the switch, and the one company left in the insurance marketplace has been planning to raise its premiums by a whopping average of 57 percent.
The demise of Iowa's proposal comes as the president and his health-care aides have undertaken recent moves to damage the marketplaces created under the 2010 law for Americans who cannot get affordable health benefits through a job. The administration has slashed funds for advertising and enrollment help for the sign-up period that starts Nov. 1. It will be impossible for consumers who already have ACA health plans to switch if they do not shop around during a shortened enrollment period. Longer term, the president wants to make it easier for individuals and small businesses to buy health plans that skirt ACA protections and has ended the law's reimbursements to insurers for subsidies to lower-income customers.
For several months, Iowa's insurance commissioner, Doug Ommen, has been saying that he and his staff were working closely with federal health officials, who he said had told him by late August that the proposal met federal requirements.
At a news conference Monday with the governor, Ommen reiterated his prediction that, without the state's alternative method in place, up to 22,000 Iowans will lose coverage for the coming year because only one insurance company has agreed to sell ACA coverage, and its prices are high. "The healthiest are the first to go," Ommen said.
Monday's announcement in Des Moines ended a bold attempt that Iowa began in June to use a facet of the health-care law that, starting this year, allows states to request federal permission for what are known as "1332 waivers" to achieve the law's insurance goals through different means.
While a few states, including Alaska and Minnesota, have received such permission to try to buffer insurers from high-cost customers, Iowa is not the only state that has not succeeded. Also on Monday, federal health officials ruled that an application was incomplete from Massachusetts, which last month applied for a waiver to allow it to create for 2018 a "stabilization fund" to offset a potential loss of cost-sharing reduction payments to insurers.
Also late last month, Oklahoma withdrew a proposal, which was not as far-reaching as Iowa's. The state's health secretary accused the administration of failing to make a decision "after months of development, negotiation, and near-daily communication over the past six weeks."
In contrast, Iowa's officials assumed a more amicable tone, and the state and federal health officials dispatched a joint statement. Reynolds said that Trump had encouraged Seema Verma, administrator of the Health and Human Services Department's Centers for Medicare and Medicaid Services, to work with Iowa officials. Verma was the member of the administration with whom the president spoke in August after reading a Wall Street Journal article about the state's plan, said an individual briefed on the exchange who spoke on the condition of anonymity to disclose a private conversation.
Under the Iowa Stopgap Measure, the state wanted to stop relying on the ACA's federal insurance exchange and, unlike anywhere else in the country, provide residents federal help in paying for coverage outside the marketplace. The plan would have eliminated the law's subsidies for insurance premiums and out-of-pocket costs, instead creating a different type of tax credit. It also would have replaced tiers of coverage with a single level of insurance for customers buying health plans on their own. And it would have created financial buffers for insurers to help them cover customers with particularly high medical expenses.
On the August day that the state filed a final version of its plan, Ommen said that, based on conversations with CMS officials, "I am very optimistic that we will have a high level of cooperation . . . [with] the federal authorities."
At Monday's news conference, Ommen said, "It now appears that Obamacare's waiver rules are as inflexible as the law itself."
He said that, last week, a Treasury official informed the state that "they were several weeks away" from calculating how much federal money Iowa could receive under its plan. That statement was inconsistent with a letter dated Thursday from CMS's deputy administrator saying that the state's waiver request did not meet a federal requirement that any 1332 waiver may not add to the federal deficit.
Reynolds on Monday implored Congress to change the law. Sen. Lamar Alexander (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee, immediately issued a statement saying that Iowa's decision "is further evidence that the Affordable Care Act is too restrictive to allow states to help people who need to buy insurance." Alexander is a main sponsor of a bipartisan bill that would restore cost-sharing reduction payments in exchange for giving states more freedom to pursue alternatives to the ACA marketplaces.
For now, one insurer, Medica, will be selling individual health plans statewide in Iowa.