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Trump administration takes another step to allow health plans that don't cover preexisting conditions

Trump administration takes another step to allow health plans that don't cover preexisting conditions
A new Trump administration proposal could make it easier for states to deregulate their insurance markets. (Andrew Harrer / Bloomberg)

The Trump administration Monday took new steps to broaden the availability of health plans that don’t have to cover patients’ preexisting medical conditions, signaling that the federal government would support state proposals to promote more sales of these skimpier plans.

Administration officials billed the move as a way to give more choice to consumers who are struggling with expensive health insurance.

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“Now states will have a clearer sense of how they can take the lead on making available more insurance options,” said Health and Human Services Secretary Alex Azar, who has championed a host of efforts to loosen health insurance regulations established through the Affordable Care Act.

But the latest administration proposal to weaken insurance standards comes as President Trump and Republican congressional candidates are intensifying their bid to convince voters that the GOP backs patient protections in the 2010 law, often called Obamacare.

Just last week, Trump claimed on Twitter that “all Republicans support people with preexisting conditions.”

And with just two weeks until the midterm election, GOP lawmakers who voted repeatedly last year to roll back the healthcare law and its protections are insisting they will preserve preexisting-conditions rules.

The new proposal from the Department of Health and Human Services and the Treasury Department would not explicitly scrap the law’s protections, which bar health plans from denying coverage to people with preexisting medical conditions.

But the administration plan would dramatically reshape rules established by the 2010 law that were designed to prevent states from weakening these protections.

“Republicans failed at repealing and replacing the ACA last year, but this new guidance gives states the flexibility to do much of it themselves,” said Larry Levitt, senior vice president at the nonprofit Kaiser Family Foundation, which studies health insurance markets.

“The door is now wide open for states to do an end run around the ACA by creating a parallel market with lower premiums but fewer protections for people with preexisting conditions.”

Under current law, states may apply to the federal government for permission to redesign their insurance markets and keep federal healthcare aid as long as the redesign does not decrease the number of people with comprehensive health coverage.

This guardrail was intended to prevent states from enacting plans that would leave consumers with inadequate insurance coverage, as frequently happened before the healthcare law was enacted.

The new plan would change this guardrail by supporting state proposals that could shift people out of comprehensive health plans into skimpier plans that don’t cover benefits such as prescription drugs, mental health services and maternity care, and that can deny coverage for preexisting medical conditions as long as a state’s residents still have access to a more comprehensive plan.

“This guidance focuses on the availability of comprehensive and affordable coverage,” the administration says in the proposal. “This … ensures that state residents who wish to retain coverage similar to that provided under the [ACA] can continue to do so, while permitting a state plan to also provide access to other options that may be better suited to consumer needs and more attractive to many individuals.”

That means that under this new standard, states could potentially keep federal aid made available through the healthcare law even if the number of state residents in comprehensive health coverage declines.

The Trump administration has already taken several major steps to make these skimpier plans more available, issuing two regulations this year to loosen requirements on health plans.

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The first makes it easier for individuals and small businesses to band together to form so-called association health plans, or AHPs, which don’t offer a full set of health benefits.

The second, which is even more controversial, allows consumers who buy skimpier short-term plans to keep the coverage for as long as three years, up from the current limit of three months.

These regulations have been almost universally panned by patient advocates, physician groups, hospital associations and others who work in healthcare. They caution that less comprehensive health plans, while potentially cheaper, may leave people with inadequate coverage while pushing up costs for sicker Americans who need plans that cover a full set of benefits.

A Los Angeles Times analysis of official comments filed with federal agencies before the final regulations were issued found more than 98% — or 335 of 340 — of the healthcare groups that commented on the short-term health proposal criticized it, in many cases warning that the rule could gravely hurt sick patients.

The AHP regulation drew similar criticism, with more than 95% of the 279 healthcare groups that filed comments about the proposed rule expressing serious concerns or outright opposing it.

Both of these regulations are now the subject of lawsuits that argue the Trump administration rules are inconsistent with the 2010 healthcare law.

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