Iowa is asking the Trump administration for permission to jettison fundamental aspects of its Affordable Care Act marketplace, contending that a large-scale rewriting of the rules is the only way to prevent the state from becoming the first without any health plans available under the law next year.
In an extreme plan that Iowa’s insurance commissioner submitted to federal health officials on Monday, the state would essentially take an estimated $350 million in federal ACA money that its residents and insurers would ordinarily receive next year and use it for different purposes.
The proposal would abolish Iowa’s ACA insurance exchange and, unlike anywhere else in the country, give some people federal help in paying for coverage outside the marketplace. It would eliminate the law’s subsidies for insurance premiums and out-of-pocket costs, instead creating a different type of tax credits resembling those favored by House Republicans. It would also replace tiers of coverage with a single level of insurance for customers buying health plans on their own.
In an important gesture to appease insurers — two of which intend to stop selling ACA plans in Iowa in 2018, with the remaining one threatening to do the same — the state also would create financial buffers to cover customers with particularly high medical expenses.
“Our market is collapsing, so the normal rules don’t really fit the circumstance,” Doug Ommen, Iowa’s insurance commissioner, said. He added that he met last Wednesday with Seema Verma, administrator of the Department of Health and Human Services’ Centers for Medicare and Medicaid Services.
“We went through the plan, walked through it in some detail,” Ommen said, adding that he was “very optimistic that we will have a high level of cooperation” from CMS.
The “stopgap” plan, as Iowa is portraying it, comes one week before the state’s deadline for insurers to decide whether to participate in the marketplace next year. It is the most far-reaching deviation from the 2010 health-care law that any state has attempted — in both the changes it envisions and the fact that they would happen on such a rapid schedule, bypassing the normal steps the ACA permits for states seeking exceptions.
Some health policy experts on Monday questioned whether Iowa’s plan would be legal. “Absolutely not,” said Tim Jost, an ACA supporter and retired professor of health-care law at Washington and Lee University, who said that federal officials may give permission for exceptions only under what are known as 1332 waivers. That process requires detailed data, public involvement and other lengthy steps that Iowa says are not practical.
A CMS spokeswoman said via email that the agency couldn’t comment “on matters under review, and that is all we have to say.” A White House official, speaking on the condition of anonymity about a proposal on which the administration has not made a ruling, said officials “are going to work with states as best we can within the confines of the law to make sure states are doing what they can with the insurance marketplace.”
An administration decision to allow Iowa’s plan would test how far any state could move from ACA rules without a change in federal law. The Trump administration has been crusading to repeal the ACA, and House Republicans narrowly passed a bill that would kill major features. Senate Republicans are trying to devise their own plan.
“If the health debate in Congress stalls, then states may be lining up for waivers like this,” said Larry Levitt, senior vice president at the Kaiser Family Foundation.
At the moment, three states — Ohio, Missouri and Washington — have a total of nearly four dozen counties in which no insurer is willing to sell ACA plans for 2018.
Wellmark is one of the insurers that has announced its departure from Iowa; its chief executive, who attended the CMS meeting in Washington, has said the company will stay if that state’s plan is approved. Wellmark sells many more individual policies outside the ACA marketplace than within the exchange, so the proposed rules would allow more of its customers to receive federal subsidies.
But Medica, a relatively small nonprofit insurer based in Minnesota that joined Iowa’s ACA marketplace last year, is more wary of where the proposal will lead.
“What we want to have is rules,” said John Naylor, Medica’s chief executive, who has laid out its terms for staying. “If the state of Iowa and the government can come up with some rules, we will assess that.”