On February 13, 2018, Blue Cross of Idaho filed five new individual market plans that will not comply with federal law under the Affordable Care Act (ACA). These new “Freedom Blue” plans were filed in response to an executive order signed by Governor C.L. “Butch” Otter and implementing guidance issued by the Idaho Department of Insurance (DOI) in January 2018. Because the plans do not comply with the ACA, insurers that offer them are opening themselves up to significant legal risk and generating additional uncertainty for the market. To avoid this (and attempts by other states that to replicate Idaho’s path), the Department of Health and Human Services (HHS) could step in to enforce the ACA’s consumer protections, as the agency is required to do so under the Public Health Service Act and federal regulations.
What’s In The New Plans?
Gov. Otter’s executive order and the bulletin issued by the DOI essentially authorize a state-level version of the “Cruz amendment,” which Senator Ted Cruz (R-TX) offered to the Better Care Reconciliation Act during efforts to repeal the ACA last year. The amendment—which would have allowed insurers to offer non-ACA-compliant plans in the individual market so long as they offered plans through the marketplace—was criticized for its potential to increase premiums in the ACA-compliant market and erode protections for consumers with preexisting conditions.
Idaho’s approach—which creates an uneven playing field of market rules—and the decision by Blue Cross of Idaho to offer these non-ACA-compliant “state-based plans” is likely to have similar effects on the Idaho market. Blue Cross will continue to offer marketplace plans that comply with the ACA through Your Health Idaho, the Idaho marketplace. However, they will also sell new “Freedom Blue” plans which are currently under review by the DOI. Blue Cross of Idaho hopes to begin selling the new plans in early March, with coverage going into effect in early April. These plans would be available on a year-round basis (rather than offered during an open enrollment period like ACA plans) and sold directly from Blue Cross.
Some media outlets are reporting that the state-based plans are similar to Blue Cross’ marketplace plans, but this is very misleading. The plans are quite dissimilar. They must be, or else the average rate for these plans would not be 25 to 50 percent lower than the rate of Blue Cross of Idaho’s bronze marketplace plans. These differences may not be immediately apparent from Blue Cross marketing materials; however, if they follow the DOI’s guidance, consumers who enroll in these plans may find themselves paying higher premiums based on health status, facing preexisting condition exclusions and benefit caps, and needing to pay much more money out-of-pocket before being protected financially.
The first major difference is that Blue Cross would take health status into consideration before calculating a consumer’s final premium—a significant return to the pre-ACA era. Under the DOI guidance, Blue Cross could charge individuals with a personal or family medical history up to 50 percent more in premiums based solely on health status. These plans could also exclude coverage for preexisting conditions unless a consumer had continuous coverage (meaning they were enrolled in health insurance before they enrolled in this policy without more than a 63-day break). Older Idahoans could also be charged more relative to the ACA and those who use tobacco could face heftier surcharges as well.
Some additional differences are highlighted in Blue Cross marketing materials; consumers could see significant increases in their medical costs thanks to dollar caps on benefits and caps on annual out-of-pocket expenses that are nearly twice as high as under the ACA. The state-based plans have an annual benefit cap of $1 million and dollar caps on certain benefits such as physical therapy, both of which are prohibited under the ACA. The state-based plans also have significantly higher annual out-of-pocket maximums relative to ACA plans: up to $12,000 for an individual and $24,000 for a family. There is also what appears to be a separate annual out-of-pocket maximum of $6,500 for prescription drugs. These changes alone could more than double the cost of medical care for an individual or family. And, although some press reports suggest that most plans will cover maternity care, there is no detail in the Blue Cross marketing materials and nothing to suggest that other benefit categories that are missing under state law (such as pediatric vision and dental care) would be covered.
What’s In The New Plans?
Gov. Otter’s executive order and the bulletin issued by the DOI essentially authorize a state-level version of the “Cruz amendment,” which Senator Ted Cruz (R-TX) offered to the Better Care Reconciliation Act during efforts to repeal the ACA last year. The amendment—which would have allowed insurers to offer non-ACA-compliant plans in the individual market so long as they offered plans through the marketplace—was criticized for its potential to increase premiums in the ACA-compliant market and erode protections for consumers with preexisting conditions.
Idaho’s approach—which creates an uneven playing field of market rules—and the decision by Blue Cross of Idaho to offer these non-ACA-compliant “state-based plans” is likely to have similar effects on the Idaho market. Blue Cross will continue to offer marketplace plans that comply with the ACA through Your Health Idaho, the Idaho marketplace. However, they will also sell new “Freedom Blue” plans which are currently under review by the DOI. Blue Cross of Idaho hopes to begin selling the new plans in early March, with coverage going into effect in early April. These plans would be available on a year-round basis (rather than offered during an open enrollment period like ACA plans) and sold directly from Blue Cross.Some media outlets are reporting that the state-based plans are similar to Blue Cross’ marketplace plans, but this is very misleading. The plans are quite dissimilar. They must be, or else the average rate for these plans would not be 25 to 50 percent lower than the rate of Blue Cross of Idaho’s bronze marketplace plans. These differences may not be immediately apparent from Blue Cross marketing materials; however, if they follow the DOI’s guidance, consumers who enroll in these plans may find themselves paying higher premiums based on health status, facing preexisting condition exclusions and benefit caps, and needing to pay much more money out-of-pocket before being protected financially.
The first major difference is that Blue Cross would take health status into consideration before calculating a consumer’s final premium—a significant return to the pre-ACA era. Under the DOI guidance, Blue Cross could charge individuals with a personal or family medical history up to 50 percent more in premiums based solely on health status. These plans could also exclude coverage for preexisting conditions unless a consumer had continuous coverage (meaning they were enrolled in health insurance before they enrolled in this policy without more than a 63-day break). Older Idahoans could also be charged more relative to the ACA and those who use tobacco could face heftier surcharges as well.
Some additional differences are highlighted in Blue Cross marketing materials; consumers could see significant increases in their medical costs thanks to dollar caps on benefits and caps on annual out-of-pocket expenses that are nearly twice as high as under the ACA. The state-based plans have an annual benefit cap of $1 million and dollar caps on certain benefits such as physical therapy, both of which are prohibited under the ACA. The state-based plans also have significantly higher annual out-of-pocket maximums relative to ACA plans: up to $12,000 for an individual and $24,000 for a family. There is also what appears to be a separate annual out-of-pocket maximum of $6,500 for prescription drugs. These changes alone could more than double the cost of medical care for an individual or family. And, although some press reports suggest that most plans will cover maternity care, there is no detail in the Blue Cross marketing materials and nothing to suggest that other benefit categories that are missing under state law (such as pediatric vision and dental care) would be covered.
by Katie Keith, Health Affairs | Read more:
Image: uncredited
[ed. "Freedom Blue"(...as they say, a fool and his money are soon parted). I guess if you name anything Freedom someone will buy it. Want some Freedom fries with that?]
[ed. "Freedom Blue"(...as they say, a fool and his money are soon parted). I guess if you name anything Freedom someone will buy it. Want some Freedom fries with that?]
