Column: Idaho scraps Obamacare customer protections. Will the Trump administration enforce federal law?

Not inclined to look a gift horse in the mouth, Blue Cross of Idaho announced Tuesday that it will jump into that state’s new non-Obamacare marketplace with a sheaf of health plan offerings that openly violate federal law.

The state’s largest health insurer, Blue Cross filed five plans with state regulators that place annual benefit caps on customers, disallow maternity coverage, and can charge applicants more if they have a history of medical treatment or preexisting medical conditions. None of that is permitted under the Affordable Care Act, which governs health insurance plans in the individual market nationwide.

The plans do comply, however, with an executive order issued Jan. 5 by Republican Gov. Butch Otter authorizing insurance plans “outside the restrictions of the Affordable Care Act.” The state insurance department released guidelines about two weeks later.

Idaho’s political leadership loves to talk about “freedom” and “choice” when it comes to health insurance, but deep down what they mean is more freedom and choice for insurance companies and only the appearance of freedom and choice for ordinary residents.

The Blue Cross proposal is almost certain to drive up premiums for unsubsidized customers buying ACA-compliant plans in the individual market (and people with health conditions will need those ACA plans). It will force other Idaho insurers to follow Blue Cross’s lead, lest they be stuck with all the older and sicker patients in the state.

And it will encourage other states to undermine the Affordable Care Act themselves, unless the Trump administration accepts its responsibility to enforce the law of the land aggressively.

“Idaho’s approach is not acceptable,” health law expert Timothy S. Jost observed a few days before the Blue Cross announcement. “There are already signs that other states may follow suit. Congress failed to repeal the ACA. Individual states certainly cannot repeal it on their own.”

Alex Azar, the newly annointed Health and Human Services secretary, dodged an opportunity to take an explicit stand on the Idaho case Wednesday. Azar appeared before the House Ways and Means Committee to defend Trump’s HHS budget, which eviscerates public healthcare programs, including Medicare and Medicaid. He got only one question about Idaho, from Rep. Sander Levin (D-Mich.).

Azar said only: “There are rules, and there’s a rule of law that we need to enforce.” But he didn’t give specifics. (Levin may have given Azar an out via inartful questioning; he asked whether HHS was reviewing an Idaho request for a waiver from the ACA. Idaho hasn’t asked for a waiver, as Azar noted, and the state seems to think it doesn’t need one. “I’m not aware that our opinions or views have been solicited,” Azar said.)

Yet legal authorities say HHS doesn’t have to wait for a waiver request to act forcibly against the state or Blue Cross. Nor should it. With the filing by Blue Cross, “the issue of whether HHS will step in to enforce becomes real rather than theoretical,” tweeted Larry Levitt of the Kaiser Family Foundation on Wednesday.

“This is about affordability and choice,” said Charlene Maher, the chief executive of Blue Cross of Idaho, in announcing the plans. But let’s examine the Blue Cross proposal and its ramifications to see if that’s true. The plans are slated to be offered starting next month, with coverage beginning April 1.

Blue Cross meets the state’s requirements that it offer at least one ACA-compliant plan in any district where it wishes to offer a non-compliant plan and that all the plans cover the 10 essential health benefits required by the ACA, except for maternity care — that has to be offered by at least one plan in every service district, but doesn’t have to be provided by all. In this case, Blue Cross will offer at least one plan without maternity coverage. The plans impose a $1-million annual benefit cap, which is permitted by the state but not by the ACA.

They also would subject applicants to medical underwriting — that is, higher rates for preexisting conditions or medical histories that could make them seem risky to cover — if the applicant has gone without coverage for 63 days or more. That so-called continuous coverage provision was part of several ACA repeal measures introduced by Republicans in Congress over the last year, all of which failed.

Premiums for the new plans will range from well below those for local ACA plans to somewhat higher, with the differences linked to the customer’s health profile. As part of the application, Blue Cross will require customers to fill out a “health statement” listing dozens of current or prior conditions for which the customer received treatment, as well as disclosure of previous surgeries, plans for future surgery, congenital conditions, and medical claims higher than $5,000.

Such questionnaires used to be common in the individual market, but disappeared after 2013, when they were outlawed with the launch of the ACA marketplace.

The action by Blue Cross puts other Idaho insurers in a bind, as ACA expert Charles Gaba observes. Indeed, it raises the prospects of a near-term collapse of the ACA market in that state. Under the state rules, individual customers can flip back and forth between ACA plans and the non-ACA plans at any time, rather than waiting for open enrollment each year or claiming a special enrollment right, say because they lost their existing insurance, got married or had a baby.

Under the state rules, the ACA and non-ACA customers of any given insurer are supposed to be in the same risk pool, so there shouldn’t be a change in that company’s overall risk. But what about the effect on other insurers? If Blue Cross siphons healthier customers from them, their costs will shoot up — and since their 2018 rates are set in stone, losing low-risk enrollees to Blue Cross will stick them with “a massive bath for nine months out of the year,” Gaba points out.

That’s not a stabilizing development for the Idaho market. Moreover, the only choice Idaho insurers will have for 2019 will be matching the slimmed-down coverage offered by Blue Cross if they wish to participate in the Idaho market at all. As is always the case, customers eligible for premium subsidies will be insulated or even immunized from premium spikes. But unsubsidized customers — anyone with household income higher than 400% of the federal poverty line — will be socked hard.

If he’s serious about his duty to uphold the Affordable Care Act, Azar has no real option other than to nip the Idaho venture in the bud. He could have taken a strong stand during his appearance on Capitol Hill on Wednesday, but he failed. That’s not a good sign for the rule of law.

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