Trump administration allows states to loosen ObamaCare coverage requirements

The Trump administration on Thursday told states it will allow them to use ObamaCare insurance subsidies to help people pay for plans that don’t meet the law’s coverage requirements.

The new use of subsidies is part of a larger push toward giving states more flexibility to waive ObamaCare requirements and pursue conservative health care 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.

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The waivers were designed with specific “guardrails” meant to ensure that the waivers met at least the same coverage level as under ObamaCare.

Trump administration officials emphasized on Thursday that the pre-existing protections written into the Affordable Care Act (ACA) will not be changed.

“Critics of state flexibility will always assume the worst,” Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said on a call with reporters. “The ACA’s pre-existing condition protections cannot and will not be changed.”

Yet the new guidance loosens those guardrails and could allow states to subsidize health plans that exist outside the traditional ObamaCare insurance market, while also reducing subsidies for more comprehensive plans.

Under the examples outlined by Verma, a state could also create an entirely new subsidy program.

They could base subsidies on age, rather than income, or set income limits higher or lower than the federal requirements.

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, while including coverage for pre-existing conditions.

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

CMS also said states would be allowed to let residents with employer-based coverage set up accounts in which they mingle the federal subsidies with health-care funds from their job or personal tax-deferred savings funds to use for premiums or other medical expenses.

Verma said flexibility is needed because insurance rates have increased since the law was passed, and people are being priced out of the market.

She decried ObamaCare’s “one size fits all” approach to plan design, and said she wants to give people more choices than are available currently under the law.

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.

In a statement Thursday, Health and Human Services (HHS) Secretary Alex Azar said the recommendations outlined by the agency are intended to “show how state governments can work with HHS to create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”