Facing what it called a “collapse” of its Obamacare market next year, Iowa is asking the Trump administration to let it reallocate millions of dollars and create a stopgap program that would provide health insurance options for 72,000 Iowans covered by the Affordable Care Act.
Under the proposal made public on Monday, the state would use $352 million in federal money to provide backup funding for insurers and overhaul Obamacare’s subsidies for consumers next year. The state would also create a single standardized plan that insurers would offer.
“The proposed Stopgap Measure is the only proposal ensuring that health insurance will be sold to those utilizing Iowa’s individual market in all of Iowa’s 99 counties in 2018,” Insurance Commissioner Doug Ommen said in a statement Monday. Ommen was appointed by the state’s former governor, Republican Terry Branstad. “Iowa’s individual health market has collapsed as result of the Affordable Care Act,” Ommen said.
Across the U.S., many health insurers are quitting the state-based markets created by the ACA amid uncertainty over the law’s future, leaving consumers in some states with limited options – or in some cases, no options at all. Aetna Inc. and Wellmark Inc. said they wouldn’t sell Obamacare plans in Iowa for 2018, leaving just the insurer Medica in most of the state and sparking the crisis.
The subsidies Iowa is proposing are similar in structure to a Republican plan that passed the House of Representatives. They provide a fixed level of financial assistance based on age and income. That’s in comparison to Obamacare’s subsidies that are tied to the cost of health insurance plans.
Under Iowa’s plan, a 40-year-old making about $42,000 a year would pay an estimated $384 a month out of pocket next year to buy coverage, compared to $291 under Obamacare. In general, younger and wealthier people would fare better under the Iowa proposal, while older and poorer people would face higher costs.
The program doesn’t include Obamacare’s cost-sharing reductions, which help poorer people afford to use their insurance plans by reducing their deductibles and out-of-pocket costs.
About 72,000 people in Iowa are covered by Obamacare plans this year, according to the Iowa Insurance Division. Wellmark said Monday it would offer the special plans created under the “stopgap” proposal next year statewide, presuming the program is approved by the Trump administration.
The measure proposed by Iowa is known as a Section 1332 waiver, and requires approval from the federal government. The waivers were created by the ACA to let states try different approaches to achieving the health law’s goal of helping people gain insurance coverage.
Iowa’s proposal has three main pieces:
- It would create a standard plan, pegged to Obamacare’s mid-level silver offering. Insurers and consumers who want the extra help would need to buy that plan.
- The state would use about $220 million of funding to provide the new subsidies.
- And the state would create a reinsurance program, funded with an estimated $80 million, to help insurers deal with high-cost claims.
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