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The Trump administration steps in to stop Idaho’s anti-Obamacare plan

But the state might have an alternative route to the same goal.

Javier Zarracina/Vox

The Trump administration is stepping in to stop Idaho’s plan to allow non-Obamacare insurance coverage back onto the market, in a rebuke of the conservative state’s brazen flouting of the health care law.

In a letter to Idaho Gov. Butch Otter, the Centers for Medicare and Medicaid Services warned that the state would not be substantially enforcing the Affordable Care Act if it allowed insurance plans that did not adhere to the law’s protections for preexisting conditions to be sold. CMS Administrator Seema Verma wrote that if Idaho wouldn’t enforce Obamacare, then the federal government would be obligated to.

Legal experts were closely watching how the Trump administration would respond to Idaho’s proposal. They argued that CMS had numerous obligations — both under the ACA and under the Constitution — to prevent the state and any health insurers from so openly subverting Obamacare while it remains the law of the land.

It is a victory for the rule of law, given how openly Idaho was defying the ACA. But the CMS letter did include a caveat that provides some consolation to Republicans officials — in Washington and in Boise — who want to unwind Obamacare.

The state could conceivably tweak its proposal, Verma noted, to align with the Trump administration’s own proposed regulations to expand short-term insurance plans — which also do not have to comply with the ACA’s insurance regulations. It would be a back door to achieve the same end (providing an escape hatch from Obamacare for healthier customers, one that is likely to lead to higher premiums for those left behind in the law’s markets) and would be more clearly in line with the administration’s agenda.

CMS’s decision will also likely dissuade other states from pursuing a proposal similar to Idaho’s. Health policy experts had believed other Republican states would have followed if Idaho were allowed to go forward.

As Vox previously explained, this is what Idaho’s proposal would have done:

The state has rolled out the most audacious anti-Obamacare proposal yet, one that openly defies the fact that the Affordable Care Act is still in effect and in force. Idaho officials announced last month that they would allow insurance plans to be sold in the state that don’t comply with the health care law’s regulations. This means that plans can discriminate against people with preexisting medical conditions, by charging them higher premiums, and impose caps on the benefits their customers receive.

The most immediate question after Idaho announced its plan was whether any health insurer was actually going to take up the state’s offer. Because unless insurers bought in, the Idaho proposal would be an interesting theoretical exercise and nothing more.

Then last week, Blue Cross of Idaho submitted five “Freedom Blue” plans it wants to sell in the state starting in April that would not comply with the ACA’s regulations. The insurer will also continue to sell plans on Idaho’s Obamacare marketplace, for the record, as the state is requiring.

The average premium for these “freedom” plans would be 25 to 50 percent lower than the insurer’s Obamacare plans, according to this great breakdown from Katie Keith at Health Affairs. But there are some pretty big differences, Keith said, between ACA coverage and these new Idaho plans:

Customers could be charged up to 50 percent higher premiums based on their or their family’s medical history; the ACA has famously prohibited insurers from charging different customers different rates based on their health status

Customers could be denied benefits for preexisting conditions unless they maintained continuous coverage; again, the ACA forbids this

Annual caps are back: These new “freedom” plans have annual limits of $1 million in benefits, which are outlawed under the ACA; there are also specific dollar caps for certain services, such as physical therapy