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. And the brazen move — Gov. Butch Otter is plowing ahead on his own, without seeking federal waivers or permission — poses a test for the Trump administration.
Other conservative states see Idaho’s gambit as a blueprint for shaking off Obamacare’s strict regulations. But legal experts and consumer advocates who back the Affordable Care Act say it won’t be so easy. They expect costly and time-consuming lawsuits over health insurance and state directives that directly conflict with federal law.
"It sure seems open-and-shut to me," said Jay Angoff, a former Obama administration health official and attorney who has challenged other state efforts to undercut the 2010 law.
The state’s largest insurer, Blue Cross of Idaho, announced Wednesday 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.
It’s an early challenge for new HHS Secretary Alex Azar, entering his third week on the job. Testifying on the president’s budget Wednesday, Azar wouldn’t say whether he’d let Idaho move ahead or block it.
"We’ll look at that whenever it comes to us," Azar said. "There are rules, and there’s a rule of law that we need to enforce."
The Idaho plan is already playing a role in the crowded GOP gubernatorial primary. Lt. Gov. Brad Little, a front-runner to succeed Otter, has made it a staple in his campaign.
The Obamacare market has been “hemorrhaging” customers, particularly the prized young and healthy ones essential for keeping the market stable, Little told POLITICO. “This is an Idaho solution to that problem,” he declared.
Dean Cameron, director of the Idaho Department of Insurance, said that “dozens” of red states have already expressed interest in potentially emulating the state’s plan. He downplayed any legal challenge, saying he’s confident the state will win.
“We have had more attorneys than I can shake a stick at review it,” Cameron said. “We think we are in a very legally defensible position.”
Blue Cross of Idaho officials said they’re simply responding to an increasingly dire problem for their customers. Middle-class Idahoans who make too much money to qualify for Obamacare subsidies are facing sky-high premiums and opting to go without coverage. The insurer estimates there are about 110,000 people across the state who fall into that category — roughly the same number who are enrolled in Obamacare plans.
“Those healthy people that can’t afford coverage have already left the market,” said Dave Jeppesen, executive vice president of the Idaho Blue. “It’s already destabilized.”
The ACA’s supporters worry that Idaho’s scheme isn’t about consumer choice but about dismantling Obamacare. Patient groups also quickly panned the Idaho plan out of fear that sicker people will face higher premiums and the new insurance products could exclude key benefits, including maternity care and cancer screenings.
A number of steps at the federal level could further destabilize the already wobbly Obamacare markets. The GOP’s new tax cut package repealed the individual mandate penalty, effective in 2019. The Trump administration is in the midst of proposing new regulations that would make it easier for states to allow cheaper, skinnier plans that don’t meet the current coverage rules.
The Idaho marketplace previously estimated that it could lose half of its customers if plans that shun Obamacare rules are permitted to be sold.
“It’s really a comprehensive frontal assault on the Affordable Care Act,” said Tim Jost, an Obamacare supporter and legal expert who has written extensively about the law.
Idaho’s move to ignore Obamacare rules, which state officials announced at the end of January, is only one part of a health agenda that could radically alter the state’s coverage landscape. The state is also seeking to make more people eligible for Obamacare tax credits to make insurance more affordable on the law’s marketplaces. Although the state hasn’t expanded Medicaid under Obamacare, which would cover up to 78,000 people, it has developed a plan for partial expansion for roughly 2,500 low-income people with serious medical conditions. Both ideas require approval from the Idaho Legislature and federal officials.
The state has a mixed record on the health law. Despite shunning Medicaid expansion, Otter was one of the very few GOP governors who opted to set up a state-based Obamacare exchange, rather than relying on the federal HealthCare.gov portal. Idaho’s Obamacare market remains competitive, with nearly 102,000 people signing up for medical and dental coverage this year.
While Blue Cross of Idaho jumped in to quickly offer the new state plans, discord is brewing among other health insurance companies active in the state. In a statement Wednesday, Regence Blue Shield of Idaho said it believed the only way Idaho could pursue such a plan legally is by seeking an Obamacare waiver from federal officials.
“The Affordable Care Act is still valid law, and we do not see how the guidance contained in the Jan. 24, 2018, bulletin fits within that framework,” a company spokesman told POLITICO.
But others don’t think Idaho should have to rely on such permission.
“We’re a state; we don’t need approval,” Sen. Jim Risch (R-Idaho) said Wednesday. “Get out of here.”
Adam Cancryn contributed to this report.