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Trump administration allows ACA subsidies for leaner health plans

Centers for Medicare and Medicaid Services head Seema Verma announced that ACA subsidies could be used for cheaper health plans. But they don’t cover certain benefits, and could refuse to cover people with preexisting conditions. (Jabin Botsford/The Washington Post)

The Trump administration is further moving to roll back the Affordable Care Act by allowing its insurance subsidies to be used for leaner health plans that don’t cover a full range of benefits.

The result is that red and blue states are likely to see a deepening divide in how they implement the 2010 health-care law known as Obamacare, which the administration has been chipping away at since a failed effort to repeal and replace it by the Republican Congress last summer.

Under guidance issued Monday by the Centers for Medicare and Medicaid Services (CMS), states seeking federal waivers to run their insurance marketplaces will be given much more leeway. That includes the ability to apply ACA subsidies to short-term and association health plans — two types of coverage the administration has expanded as a way of making cheaper plans available to those who want them. These plans don’t include coverage of certain “essential” benefits like mental-health services and prenatal care and they can refuse to cover people with preexisting conditions.

The guidance, sharply decried by Democrats as undermining ACA consumer protections, represents a dramatic departure from the way the Obama administration interpreted these “1332” waivers and underscores the Trump administration’s effort to peel away as many requirements as possible even as Obamacare remains on the books.

“Today we are continuing our efforts to mitigate the damage caused by Obamacare,” CMS Administrator Seema Verma said on a phone call with reporters. “These waivers . . . allow states to get out from under the onerous rules under Obamacare.”

Health care has become a central issue in the 2018 midterm campaign, with Republicans working to defend themselves against Democratic charges they would strip people with preexisting conditions of access to affordable health care. This move is likely to be seen by Democrats as another step in that direction.

President Trump vowed that “all Republicans support people with preexisting conditions” and has said that “if they don’t, they will after I speak to them.”

The ACA requires that people with preexisting conditions can access affordable health care, and the new rules don’t change that requirement. Under the new guidance, states can apply for the ability to sell cheaper plans with fewer benefits. But they would still have to offer other health plans with a full range of benefits under the ACA, though they would be more expensive.

In states that receive these type of waivers, younger, healthier consumers may be attracted to these plans since they will be able to use ACA subsidies for the first time to buy them.

The move is bound to further accent the growing divide between Republican-led states that are shying away from Obamacare and Democrat-led states that have embraced the law’s tenets. Republican-led states have been more likely to reject Medicaid expansion and some have applied for waivers to enact work requirements for Medicaid.

Democrats and ACA advocates charge that expanding access to these leaner plans could harm consumers and make monthly premiums more expensive for Americans with preexisting conditions. They’ve made that a central charge in their campaigns as they seek to gain ground in the House and Senate.

“Every day, Republicans further expose their brutal agenda to destroy Americans’ health care,” House Minority Leader Nancy Pelosi (D-Calif.) said in a statement. “President Trump is once again cynically pushing families into shoddy junk plans that can discriminate against pre-existing conditions and that do not cover essential health benefits, while making dependable health coverage more expensive for everyone else.”

The administration has acknowledged that it must abide by the ACA — but it has also issued a number of new rules for the marketplaces, where about 11 million Americans get their health coverage. Officials say they’re giving states the needed flexibility to provide consumers with cheaper health plans.

But Democrats charge that the administration is trying to sabotage Obamacare, despite its success in cutting the U.S. uninsured rate in half through creating subsidized private marketplaces and expanding Medicaid. Andy Slavitt, former CMS acting administrator under President Barack Obama and a top ACA advocate, said he’s concerned that expanding the waivers will make it harder for people to find affordable coverage.

“You can make the guardrails narrower but you can’t make them broader,” Slavitt said.

Earlier this year, the administration rolled out new rules expanding the duration of short-term health plans and making it easier to form health-care associations. Trump, Verma and Health and Human Services Secretary Alex Azar have touted these types of plans as a key way they’re making more choices available to shoppers on the individual market, who have seen dramatic price increases and insurer exits in recent years. Premiums have come down a bit for 2019, however.

“Secretary Azar and Administrator Verma today are giving states a better tool to help lower Obamacare health insurance premiums, by giving them more freedom,” said Sen. Lamar Alexander (Tenn.), the top Republican on the Senate Health, Education, Labor and Pensions Committee.

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