Idaho officials say they can still make noncompliant state plans work despite CMS' rejection

Health insurance benefits form
Idaho officials believe they can still make sure proposed "state-based plans" work, despite CMS rejecting the plan. (Getty/michaelquirk)

CMS blocked Idaho officials' plans to sell non-ACA-compliant insurance last week, but leaders in the state say they view the letter as encouragement to continue pursuing the plan. 

Centers for Medicare & Medicaid Services Administrator Seema Verma wrote in a letter that the state's proposal would violate consumer protections included in the Affordable Care Act. However, she added that she would work with the state in the future to allow for more flexibility in how it offers insurance. 

Idaho announced in January that it would offer "state-based" insurance plans that skirt the ACA's essential health benefits and other rules to allow residents to access a low-cost insurance option. Blue Cross of Idaho was the first insurer in the state to announce it would offer such plans. 

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Though Verma spiked the plan, Idaho Gov. C.L. "Butch" Otter, Lieutenant Gov. Brad Little and Department of Insurance Director Dean Cameron said in a joint statement that CMS' ruling was "not a rejection" of the state's plans. 

"Her letter made it clear that Idaho's efforts to pursue innovative alternatives hold great promise, and we believe that Idaho's plan aligns with the state's responsibility for 'substantially enforcing' Obamacare," the officials said in the statement. "In fact, we consider the letter an invitation from CMS to continue discussing the specifics of what can and cannot be included in state-based plans." 

"We will consider all possible options and then continue discussions with CMS and HHS on how best to achieve our shared goals of reducing the costs of coverage and stabilizing our health insurance market," they added. 

In the letter, Verma said that "with certain modifications" the state-based plans could be offered as short-term insurance. The Department of Health and Human Services has recently proposed expanding the enrollment period for those plans to 12 months and is considering the potential for renewability. 

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Cameron said in an interview with the Idaho Statesman that he and other state officials had been expecting CMS' letter "for some time." He said, however, that he believes offering short-term insurance as opposed to the proposed state-based plans would be worse for Idahoans. 

"Granted, [short-term plans] may be an easier approach for them to legally defend, but it won't be for us," Cameron said. 

The short-term plans, he said, would offer skimpier benefits packages and would do less to protect people with pre-existing conditions than the state's proposed plans. Plus, as they would not be included as part of the insurance markets, the plans could lure healthy people away, worsening the risk pool, he said. 

Critics of expanding short-term plans, including America's Health Insurance Plans, have also argued that it could destabilize the markets.