The Trump administration plans to allow states to direct billions of dollars of Obamacare subsidies to health plans that don’t meet the law’s requirements.
The change is intended to make insurance more affordable and expand consumer choice. Premiums for Affordable Care Act health plans have increased in recent years, straining the budgets of many middle-class people who don’t qualify for the law’s subsidies.
But critics say the new policy could undermine the ACA by driving costs up for people who want more comprehensive coverage. President Donald Trump has been a vociferous opponent of President Barack Obama’s signature legislative achievement.
“For far too long, states have looked to Washington with a ‘Mother, may I?’ approach,” said Seema Verma, the administrator for the Centers for Medicare and Medicaid Services. “Today we are saying the states have the power to make the individual markets work through innovative policies that best meet the needs of your citizens.”
She unveiled the plan at the American Legislative Exchange Council, a group that promotes conservative policies at the state level.
The policy would allow states to restructure how the premium subsidies in the ACA market are targeted and decide what type of plans can receive them. Under the law, premium subsidies can be used only to purchase health plans that meet the law’s standards, known as qualified health plans.
The Trump administration has expanded access to other types of insurance with weaker consumer protections, such as short-term health plans. State attempts to steer Obamacare subsidies to noncompliant plans would likely face legal challenges.
CMS offered several broad directions for how states might take advantage of the looser requirements. In one approach, they could direct ACA subsidies to personal accounts that consumers would be able to use to shop for insurance or other medical expenses.
Another approach would let states split the risk pools in their insurance markets, creating separate programs for people with costly medical conditions who are more expensive to insure.
Verma tried to pre-empt criticism that the policy would weaken protections for people with pre-existing conditions.
“The ACA’s pre-existing condition protections cannot and would not ever be waived,” she said.
Proponents of the ACA say policies that allow less comprehensive coverage to be sold at lower prices have the effect of forcing people with greater health needs to pay more.
“The ACA says, if you have a pre-existing condition, you will not be treated any differently than people without a pre-existing condition,” Joel Ario, a former insurance commissioner who worked for the Obama administration setting up the ACA marketplaces, said in an interview earlier in November.
“Unless you keep everybody in the same pool the way the ACA does, and treat them all equally, you are making the people who don’t get the better deal into second-class citizens,” said Ario, now a consultant with Manatt Health.
Verma said proposals from states would be evaluated on a case-by-case basis, and that CMS will particularly consider the impact on people with high medical needs.
The administration first released plans for more permissive state policies in a guidance document last month.
Several states have used waivers in the past to create reinsurance programs that lower the cost of insurance on their ACA marketplaces. States still have to apply to Washington for permission to vary ACA rules.