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You are here: Home / Anderson On Health Insurance / Their own private Idaho

Their own private Idaho

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What is going on in Idaho’s individual health insurance market?

Politico reports:

Idaho is going rogue on Obamacare.

The Republican-led state has a maverick plan to flout the federal health care law, letting insurers sell plans that don’t meet Obamacare coverage rules and patient protections….

The state’s largest insurer, Blue Cross of Idaho, announced Wednesday it has five “state-based” plans that it wants to get approved and on the market by April. They will be cheaper than Obamacare plans but won’t provide as robust benefits or protections for people with pre-existing conditions.

Mechanically, Idaho is attempting to implement the Cruz amendment from the 2017 summer Senate repeal and replace bill. The Idaho rule is that as along as an insurer also offers an ACA plan, they can offer underwritten plans with life time limits and benefit caps as well to the individual market.

This is aimed at bringing down premiums for healthy non-subsidized buyers. It will be a better deal for 24 year old men who won’t be buying plans with maternity coverage. It will be a far worse deal for individuals with significant health needs and who don’t qualify for a subsidy as the underlying risk pool in the ACA markets will get worse and premiums will go up. It will not meaningfully matter to people who qualify for subsidies and are happy with what they get right now.

The core problem is that this is wildly illegal. ACA legal expert Nick Bagley comments:

The only individual market full year insurance plans that are allowed to be underwritten and to offer limits are the grandfathered and the grandmothered plans. All other plans that were first offered on the market after 1/1/14 must comply with ACA rules, and most plans offered before 1/1/14 and after the signing of the bill also comply with those rules. The state insurance department is the first regulator. If the state does not knock back illegal plans, then CMS has an obligation to do so.

The new Secretary of HHS has been asked about that and it seems like CMS is looking into what Idaho is doing. Given that CMS’s political leadership is against enrollment but open enrollment went mechanically well, I will not be surprised if there is a letter being drafted right now that goes like this:

Dear Idaho,
We know that you want to do something to help the people who are priced out of the insurance market. That’s cool. We want to help states customize their own marketplaces.

However the current plan is bananapants illegal so knock that shit off. Insurers participating in something this ludicrous are placing themselves at risk of fines up to $100 per member per day.

Let’s talk about your 1332/1115 proposal next week.

XOXO
CMS Legal staff

If that letter is not being written, then someone else will sue to stop the selling of these non-compliant plans.  Other Idaho ACA insurers are basically being dared to either all participate in this scheme or sue as the non-compliant plans will take away a significant portion of their off-Exchange good risk mid-year which is a negative material financial event.

So the TLDR: There will be a lot of lawyers soon.

Reader Interactions

17Comments

  3. 3.

    Bodacious

    Forgive me Father, I have sinned…….I moved to Boise in 2017. Can I just say, wonderful people, but NOT my Tribe.

  5. 5.

    dr. bloor

    There will be a lot of lawyers soon.

    I’ll set the over/under on DOJ attorneys tasked to get Idaho into compliance at zero. And I’ll take the under.

  6. 6.

    Scott

    I have an idle question on grandfathered plans. Supposedly people keep these because they are cheaper and cover less. My question is this: Has there been any study or data on the freeloader effect of these grandfathered plans? Seems to me, the incentive is to stay cheap until an ACA compliant plan is needed to get the coverage required.

  8. 8.

    Wag

    Once again, the failure of our current political environment fails to surprise me while simultaneously boggling my mind.

  9. 9.

    graeme

    Here’s a big surprise. A country built on genocide, revolution, slavery, civil war and gun worship can’t find a way to give its citizens decent health care.

  12. 12.

    ? ?? Goku (aka Baka Amerikahito) ? ?

    @graeme:
    I get what you’re saying, but what nation, going back far enough, isn’t guilty of the same?

  14. 14.

    Matt

    Skip the fines, just pull their license to sell insurance. Certainly what would happen if an individual agent decided to start selling illegal polices he made up.

  15. 15.

    Kylroy

    @Scott: I imagine no study has been done for a couple of reasons. First, the pre-aca individual insurance Market was incredibly tiny relative to the larger market. Second, most people who did get these plans were only on them while between jobs or freelancing; relatively few folks intended to stay on them indefinitely. Finally, they can only drop the old coverage for aca-compliant coverage at the turn of the year – better hope that new medical emergency decides to present itself in December.

    Also, these plans were sold as “guaranteed renewable” – as long as you pay the premiums (Which are free to keep going up, contingent on actuarial justification), you can keep them the rest of your life. The ACA was doing enough legal work without targeting the relatively small population on these plans, which were designed for a completely different market. If you *knew* the ACA was coming, you could have designed a plan to function as some kind of grandfathered, minimal – coverage safe harbor…but it would be a lame use of some pretty amazing precognitive abilities.

  17. 17.

    Bob Hertz

    The entire history of American health insurance has featured the attempt by healthy persons to escape from community rating.

    This started in the 1950’s, when commercial insurers could go after healthy workforces and underprice Blue Cross.

    Under Democrats we always move closer to community rating. Under Republicans we move closer to individual ‘choice.’

    The interesting question to me is whether there is a s.ystem that can satisfy both the healthy and the sick ( besides universal Medicare).

    If a state allowed full underwriting, but then collected enough in taxes to fund either a literal or a virtual high risk pool, I might be impressed.

    Unfortunately, recent history shows that the states which allow underwriting to please the healthy are also unwilling to tax the healthy.

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