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Trump administration loosens restrictions on ObamaCare waivers

Trump administration loosens restrictions on ObamaCare waivers
© Victoria Sarno Jordan

A new guidance issued Monday by the Trump administration loosens restrictions states face to waive ObamaCare requirements and will allow them to pursue conservative health policies that were previously not allowed under the Obama administration.

Currently, states can apply for waivers from certain ObamaCare policies in order to help shore up individual insurance markets. The waivers were designed with specific “guardrails” meant to ensure that the waivers met at least the same coverage level as under ObamaCare.

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The new guidance loosens those restrictions and allows states to promote health plans that don’t require the same level of coverage as the federal health law, including charging higher premiums for people with pre-existing conditions.

The guidance is a boon for red states that were previously denied ObamaCare waivers because they would not have provided sufficient coverage.

Now, those states will be allowed to offer plans with much less comprehensive coverage in what critics have called a “parallel” insurance market. Experts say that market will be more attractive to younger, healthier people. 

The new guidance emphasizes “access” to coverage, rather than the level of coverage.

States still need to provide ObamaCare-compliant plans, but they can now allow policies like short-term or association health plans.

Earlier this year, the Trump administration finalized regulations to expand access to short-term and association health plans. Both types of plans are cheaper than Obamacare plans because they can offer fewer benefits, including coverage for pre-existing conditions.

Essentially, as long as ObamaCare coverage is available for those who want it, states can encourage less comprehensive coverage options as well.

“States know much better than the federal government how their markets work. With today’s announcement, we are making sure that they have the ability to adopt innovative strategies to reduce costs for Americans, while providing higher quality options,” Centers for Medicare and Medicaid Administrator Seema Verma said in a statement.

Health advocates say the new policy is the latest example of the Trump administration allowing states to wiggle around ObamaCare requirements. While Congress was unable to repeal the law, the waivers will allow states to enact policies that advocates say counter the law’s intentions.

During a call with reporters, Verma said she has received “numerous” requests from states for a more flexible waiver policy. The new guidance will take effect immediately, Verma said, but will only impact health plans in 2020 and later. Open enrollment for 2019 begins Nov. 1.

The guidance was released just weeks before the midterm elections, where pre-existing conditions are a top issue among candidates for both parties. Verma repeatedly said the new guidance will not impact protections for people with pre-existing conditions, and, in fact, will provide new opportunities for those people to get covered.

But experts have found that allowing healthy people to buy into an insurance market separate from sick people could destabilize the system. Only people who need ObamaCare’s protections would be left in one market, and would likely face sky-high premiums.

ObamaCare waivers have been utilized on a bipartisan basis by to reduce premiums and stabilize their insurance markets. The Trump administration has been enthusiastic about these waivers, but Verma said the Obama administration interpreted the law to unnecessarily restrict the types and scope of them.

“The bottom line is the previous guidance just didn’t allow any creativity. We’ve only granted eight waivers, and seven are exactly the same type,” Verma said. “States were coming to us with all kinds of creative ideas, but the guidance was too restrictive and thwarted innovation.”

Updated at 2:09 p.m.