How One State Is Trying to Make Health Insurance Affordable Again

Posted: Mar 13, 2018 12:01 AM
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How One State Is Trying to Make Health Insurance Affordable Again

Do you remember this line by then-President Barack Obama: “If you like your health care plan, you can keep it”? The oft-repeated promise (read: “Lie of the Year”) by the former president was meant to quell Americans’ legitimate concerns about the federal government’s plan to socialize parts of the health insurance industry via the Affordable Care Act (ACA), commonly called Obamacare.

Since its rocky rollout in 2013, Obamacare has caused many health insurers to stop offering policies in marketplaces due to significant financial losses associated with operating in an Obamacare exchange. This has resulted in decreased competition, steep increases in monthly health insurance premiums, and more people, especially young and healthy Americans, choosing not to purchase health insurance.

Despite presidential promises to the contrary, more than seven million Americans were not able to keep their health care plan after the ACA went into effect, and as of this writing, 10 states have no marketplace competition in their Obamacare exchanges.

Iowa, suffering from the unintended consequences of Obamacare, has embarked on a bold reform effort to repair the damage wrought by ACA. In Iowa’s Obamacare marketplace, Medica is the lone health insurance option, after three other health insurers bailed in 2017.

The collapse of the state’s insurance market has priced out nearly all individuals who do not qualify for federal subsidies to pay for the exceedingly-expensive plans, according to the Iowa Insurance Division. Of the 46,563 Iowans covered under ACA-compliant policies, about 90 percent of them (41,742) receive federal subsidies.

Iowa Insurance Commissioner Doug Ommen recently stated, “Overall, we expected roughly 20,000 Iowans to flee the ACA individual health insurance market in 2018 due to skyrocketing costs. Unfortunately, it appears even more Iowans than we anticipated have left the individual market. … I continue to call on Congress to fix this federal problem.”

Instead of waiting for Congress to act, Iowa lawmakers have already begun to take steps to improve health care delivery in the Hawkeye State. This week, Iowa legislators passed Senate File 2349, which would facilitate the creation of association health plans (AHPs) to offer group health insurance, and Senate File 2329, which would allow agricultural organizations to offer health plans to its members.

The AHP bill was spurred by President Donald Trump’s Executive Order 13813, which outlines the administration’s goal of reducing federal regulations on small employers who form associations for the sole purpose of providing affordable health insurance to their employees. In January, the Department of Labor released its proposed rule to broaden the definition of “employer” and treat an association health plan as a single mutli-employer plan.

Permitting additional sole-proprietors and small business owners to create association health plans would increase access to the variety of health insurance plans available in the large-group insurance market that are not available in the individual or small group markets. The larger risk pools, fewer regulations, and administrative savings readily available in the large group marketplace provide those fortunate enough to purchase plans in it to have access to reduced costs and more choices.

The second bill would allow nonprofit agricultural organizations to offer their dues-paying members health plans that would not be deemed “insurance,” and therefore not subject to federal and state regulations. These health plans would be administered by a third-party health care organization.

Wellmark Blue Cross and Blue Shield, Iowa’s largest health insurance provider, is being considered by the Iowa Farm Bureau Federation (IFBF), the state’s largest grassroots farm organization, to administer health plans to its members. IFBF consists of 155,000 member families, and anyone can join for $55 or less (depending on the county of residence) in annual dues. With the recent repeal of the individual mandate, IFBF members will not be penalized for purchasing plans that don’t comply with onerous ACA regulations.

Because these plans would be exempt from the costly rules Obamacare mandated, such as essential health benefits, pre-existing conditions coverage, and caps on claims, they will attract middle-income families and young, healthy individuals who desire options that are less expensive than ACA-compliant insurance plans.

The two bills advancing through the Iowa Legislature couldn’t come soon enough. The Kaiser Family Foundation analyzed 2018 marketplace premium rates and found consumers across the country are facing significantly higher rates this year. According to the data, a 40-year-old Iowan who is not eligible for a monthly premium subsidy faces a 47–171 percent rate increase in ACA Silver insurance plans, depending on his or her county of residence. Similarly, Bronze premiums increased by 36–162 percent, and Gold premiums rose by 31–53 percent.

The citizens of Iowa should demand more reform to the state health care system beyond these two bills. This can be achieved if Iowa lawmakers apply for Section 1332 State Innovation Waivers. If approved by the Centers for Medicare and Medicaid Services, 1332 waivers could be used to redefine essential health benefits, adopt health savings accounts, and implement other pioneering solutions.

In addition to taking advantage of state waivers, state lawmakers can increase competition and reduce health care costs by repealing community rating and guaranteed-issue laws, certificate of need mandates, and unnecessary licensing standards.