The Trump administration has indicated a willingness to liberalize the Section 1332 State Innovation Waiver under the Affordable Care Act to make it easier for states to provide affordable coverage. So far, only Hawaii has been granted the ability to deviate from the ACA, but now Iowa will be testing the president’s stomach on this. Section 1332 waivers allow states to diverge from ACA rules provided they can establish a plan that:

  • provides coverage at least as comprehensive as that provided under the ACA;
  • provides coverage and protection against excessive out-of-pocket expenditures at least as affordable as that provided under the ACA;
  • covers a number of residents at least comparable to the number who would be covered under the ACA, and
  • does not increase the federal deficit.

The Obama administration allowed Hawaii to keep its healthcare plan in place, which was more generous than ACA. But Iowa’s waiver request, filed on June 12, would take away flexibility and move that state closer to a single-payer arrangement for its individual marketplace.

The Iowa state capitol building in Des Moines.
The Iowa state capitol building in Des Moines. Getty Images

ACA has not worked well in Iowa. Its CoOportunity Health plan failed primarily due to the lack of federal funding of the risk corridor program in 2014. For 2018, all but two insurers have announced their intent to leave the Iowa market and the remaining two are not firmly committed. As a result, Iowa has requested Section 1332 emergency relief to enact its plan.

The state has proposed a single plan design with a 68%–72% actuarial value. Coverage would be available on a guaranteed issue basis during normal open enrollment (Nov.1 to Dec. 15) or for special enrollees who are newly born or adopted, or can show 12 months of continuous prior coverage. Premiums would be set with age bands in 10-year increments, instead of the three bands allowed under ACA, so younger people would pay a more affordable premium.

Also see:The fate of the ACA exchanges rests on the Trump administration.”

Means-based premiums, not limited to those earning under 400% of the poverty level, would be provided although it is unclear whether cost-sharing subsidies would be available. Private insurers would get reimbursement for 85% of claims from $100,000 to $3,000,000 and 100% of claims over $3,000,000.

The individual market is in a tailspin in Iowa and other states. As I have pointed out before, if the feds can’t get it done the states step in. To me, there are acceptable provisions in this plan, but I see it spiraling into a “Medicaid for All” version fairly quickly. Iowa is the first state to crack. Others are right behind.

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Craig Hasday

Craig Hasday

Hasday is president of Frenkel Benefits, LLC, one of the largest privately held independent employee benefits brokers in the United States.