On Thursday, March 8, the Trump Administration rejected Idaho’s plan to sell health plans that do not include the consumer protections required by the Affordable Care Act (ACA). The rejection came in the form of a letter touting adherence to current law, though in many ways the letter was written by an apologetic Centers for Medicare and Medicaid Services (CMS) wanting to appease Idaho Republicans.
Earlier this year, Idaho Governor C.L. “Butch” Otter signed an executive order that allowed some Idaho health insurance plans to drop certain ACA requirements. For example, plans would not need to cover maternity care, mental illness, or other essential health benefits; insurers could charge higher premiums to those with preexisting conditions; and insurers could deny people coverage if they had failed to maintain continuous coverage. Insurers who sold such “junk” plans would be required to also sell at least one ACA-compliant option over the exchanges. Gov. Otter’s actions seemed to test just how far Alex Azar, Secretary of the U.S. Department of Health and Human Services, would go to support the “state experimentation” Mr. Azar himself advocated for under the exchanges, as discussed in our earlier post. The answer, for Idaho, is not far enough.
Idaho’s actions presented the Trump Administration with a predicament—how to balance the Administration’s desire to free states from the ACA’s requirements with its responsibility to uphold and adhere to current law. On the one hand, CMS’s letter to Gov. Otter clearly states that the ACA “remains the law and we have a duty to enforce and uphold the law.” It further warns: “Based on our review of Idaho Bulletin No. 18-01, Provisions for Health Carriers Submitting State-Based Health Benefit Plans, we have reason to believe that Idaho may not be substantially enforcing provisions of the [ACA]. If a state fails to substantially enforce the law, [CMS] has a responsibility to enforce these provisions on behalf of the State.” On the other hand, the letter spends its first two full paragraphs deriding the ACA and making overtures to Gov. Otter. It starts, “As you know, the [ACA] is failing to deliver quality health care options to the American people and has damaged health insurance markets across the nation, including Idaho’s.” The letter closes on a conciliatory note: “We sincerely appreciate your dedication to the people of Idaho and your efforts to address the damage caused by the [ACA]. This Administration recognizes and supports the fundamental role states play in regulating insurance. We further recognize that states face unique challenges in repairing the individual health insurance market and we are committed to working with states to provide flexibility to do so.”
Finally, CMS’s letter outlines for Idaho options “within the law to meaningfully implement many of the policy proposals contained in the Bulletin.” The letter essentially says that Gov. Otter’s ACA-violating policies “with certain modifications” could be implemented as long as they were offered as part of short-term plans. This suggestion takes advantage of a loophole in the ACA—the law does not impose essential health benefit requirements on short-term insurance plans (cheap, maximum three-month insurance plans often used by people transitioning between jobs). The Trump Administration has proposed expanding short-term plans to year-long, renewable plans. The result would be that Idaho health insurers could still sell the “junk” plans envisioned as long as they label the plans “short-term.”
In the meantime, CMS gave Idaho thirty days to respond to the letter’s concerns that Idaho may not currently be substantially enforcing provisions of the ACA. It does not appear that Gov. Otter will back down easily.