With the Trump administration sending clear signals that it is open to state requests to rewrite their laws governing both Medicaid and the Affordable Care Act’s marketplaces—requests that the Obama administration roundly rejected and that could roll back coverage for hundreds of thousands of people—waivers are pouring in.
This week, Iowa submitted a final proposal to drastically overhaul its ACA compliance. It would change Obamacare’s subsidy structure in the state so that people would receive tax credits based on their age and income, not on the cost of their insurance plan. It also creates a reinsurance program and eliminates the cost-sharing reduction (CSR) federal payments that subsidize care for the lowest-income and sickest patients in the state.
“Essentially, it makes folks who make more money better off, and makes people with low incomes worse off,” Justin Giovannelli, an associate research professor at Georgetown University’s Health Policy Institute, explained to TPM. “Currently the CSRs provide a substantial benefit and really lowers out-of-pocket costs for low-income people, and this plan eliminates them. For many, that means that hundreds of dollars a month in assistance goes away, and people who might have had a small deductible could see it go up by thousands of dollars.”
What Iowa saves with these cuts would go to help lowering the premiums for people who make too much money to qualify for Obamacare tax credits.
“It creates a troubling tradeoff,” Giovannelli said, noting that the state could face lawsuits if it implements these changes.
“To get a waiver such as this, under federal law, you have to make sure that the coverage available to people before and after the waiver is similar in terms of affordability,” he said. “If you come up with a plan that dramatically increases the cost burden for low-income iowans, you run into problems. It’s hard to see how this plan complies with federal protections.”
Several groups that weighed in during the waiver’s open comment period, including the American Cancer Society and Harvard University’s Center for Health Law and Policy Information, also warned that the changes could make insurance unaffordable for thousands of Iowans.
“Enrollees living in rural Iowa are likely to face even higher premiums” under the waiver, the Harvard team said. “And eliminating these important subsidies will push more costs onto those with lower incomes, forcing these individuals to potentially forego needed services and treatment due to the increased financial burden.”
But Iowa argues that the measure in necessary to address a crisis in which a single insurer has a monopoly in many of the state’s counties and premiums are set to increase as much as 100 percent for some residents. Wellmark Blue Cross and Blue Shield, which abandoned Iowa’s exchanges in April, has agreed to return and sell plans in the state if the waiver is approved.
As it stands, Iowa appears extremely confident it will win approval from the Department of Health and Human Services, and state leaders are already preparing to implement the changes before Obamacare’s open enrollment period kicks off in November.
“We’re doing everything that’s needed to start it up as though we already had a yes,” Iowa Insurance Commissioner Doug Ommen told the Wall Street Journal.
More than a dozen states have voted to pursue their own waiver requests, and if Iowa’s is approved, still more could follow. Health care experts say this could be a backdoor way for Republican-controlled states to undermine the Affordable Care Act’s regulations. Already, several states are requesting permission to offer cheap, skimpy plans that don’t cover all of Obamacare’s essential health benefits—such as prescription drugs, emergency room visits, and maternity care.