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This Fight Over Insurance in Idaho Could Affect You No Matter Where You Live

By Christy Bieber – Updated Apr 3, 2018 at 1:20PM

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Insurance policies sold in Idaho could deny coverage based on pre-existing conditions and impose lifetime coverage limits.

Obamacare changed the insurance market in the United States in profound ways by requiring insurers to comply with myriad obligations regarding policies they sell. Because of Obamacare, insurers must provide minimum essential benefits, can't refuse coverage for pre-existing conditions, can't take health status into account when pricing policies, and can't include lifetime coverage limits. 

Coverage requirements are widely considered to have driven up insurance costs, which is why Idaho is looking for a way around requirements so insurers can sell cheaper policies to those looking for affordable coverage. If Idaho is able to exempt certain policies from Obamacare requirements, other states are likely to follow its example, which could undermine protections Obamacare was supposed to provide.

A doctor and a patient talking at a table while the doctor writes on a clipboard.

Image source: Getty Images.

What's going on in Idaho? 

In Idaho, the governor signed an executive order to permit insurers to sell policies off the Obamacare exchange that aren't in full compliance with coverage mandates. Insurers would be able to sell non-compliant policies as long as they also offered coverage on the exchange that fulfilled Obamacare's rules. The off-exchange policies would be priced based on someone's health status, those who hadn't maintained continuous coverage could be denied, and lifetime limits could apply. 

Because off-exchange policies would likely be much cheaper, healthy people would probably flock to these policies. But sick people who can't qualify or who need more coverage would stay on the Obamacare exchange.

Policies sold on the exchange would become increasingly expensive, until they are unaffordable for everyone not eligible for Obamacare subsidies. Obamacare caps policy prices at a set percentage of income for policyholders below 400% of the poverty level, so as prices rise, costs to the government associated with providing subsidies also increase.

The Trump administration is helping Idaho find ways around the rules

When Idaho first moved forward with efforts to allow non-compliant off-exchange insurance, it was an open question whether the Trump administration would enforce Obamacare's mandates or whether ideological objections to Obamacare would lead Health and Human Services (HHS) to give Idaho leeway not allowed by law.

The Trump administration did respond informing Idaho the way it structured off-exchange policies wasn't in compliance with Obamacare, which remains the law of the land. The Administration said if Idaho moved forward, they wouldn't be substantially enforcing Obamacare and the federal government would investigate.

However, while Idaho was told they couldn't allow noncompliant insurance to be sold off-exchange as planned, the Trump administration advised noncompliant policies could be sold if structured as "short-term policies."

This advice is in keeping with the administration's efforts to use expansion of short-term coverage as a way around Obamacare rules. President Donald Trump had earlier signed an executive order extending the time short-term policies could remain in effect from three months to 12 months to make it easier to use short-term coverage as an alternative to permanent insurance.

What does this mean for Obamacare?

Idaho hasn't given up on efforts to allow insurers to sell off-exchange policies not compliant with Obamacare. The Idaho insurance director objected to the Trump administration's assertions that allowing for off-exchange policies wouldn't be substantially enforcing the law, since Idaho would require insurers to still sell compliant policies.

The state may move forward with its plans with the assumption of winning a court challenge. Or, Idaho may decide to work with insurers to structure plans as short-term coverage in accordance with the advice of the administration.

Other states may also follow Idaho's lead, or opt to develop short-term plans. While HHS has shown it won't disregard the law, it's also made clear it is willing to help states find workarounds.

Your coverage options could be affected

Obamacare has been chipped away at since its passage, and changes have undermined the ability of the law to work as intended. If states find ways to allow insurers to sell coverage that doesn't comply with Obamacare's mandates, it's likely the comprehensive policies Obamacare provides will become increasingly costly.

If you get subsidies, you may be shielded from rising premiums, but those who need comprehensive coverage who have to pay for it themselves had best start budgeting for much bigger bills.

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