DES MOINES, Iowa — Iowa will allow people to buy a cheaper form of health insurance that skirts Affordable Care Act rules, under legislation signed into law Monday by the state’s Republican governor.
The law will allow Iowa’s Farm Bureau to partner with a designated insurance company to offer so-called health benefit plans that technically aren’t defined as insurance. The plans, which won’t be regulated by the state, aren’t required to cover “essential health benefits” like maternity care and mental health. They don’t have to offer protections to people with pre-existing medical conditions and can implement annual limits on coverage.
Speaking to a packed room in her formal office at the state Capitol, Gov. Kim Reynolds said the legislation is about providing relief to people who have seen their health insurance premiums spike in recent years. Many of those individuals do not qualify for subsidies that have helped others offset those costs.
Data shows enrollment in Iowa’s individual insurance market has plummeted, from nearly 75,000 people in 2016 to about 46,000 last month.
“Because of this bill, thousands of Iowans will now have affordable health care coverage,” Reynolds said.
Health policy experts say the legislation is unusual because few states have tried to take themselves out of regulating health insurance. The plan is similar to a set-up in Tennessee, which currently lets its own Farm Bureau offer such limited health insurance coverage. Those plans are tied to an unrelated law enacted in the early 1990s.
Iowa’s effort does highlight new attempts by states to work around the 2010 health law championed by President Barack Obama. Earlier this year, Idaho tried to offer skimpy health insurance, though officials there still called it insurance. It was later shot down by federal health care regulators.
Separately, President Donald Trump’s administration is in the midst of proposing rules that try to expand alternative health insurance options that don’t have to meet ACA standards.
Specific details about what’s covered in Iowa’s plans aren’t available yet. Messages left for Iowa Farm Bureau were not immediately returned last Friday. Wellmark Blue Cross and Blue Shield, the partnering insurance company, said the plans will be competitive. Cory Harris, an executive vice president for the company, noted Wellmark is also returning to the individual insurance market in 2019.
“Farm Bureau hasn’t gone through all of this to offer a product that the market doesn’t want,” Harris said.
Sarah Lueck, a health policy expert at the Center on Budget and Policy Priorities, said last month that there’s a concern younger and healthier people will jump ship into these new plans.
“That doesn’t help stability of the market,” she said.
Medica, the Minnesota-based insurance company that is currently the sole carrier in Iowa, criticized the proposal as it moved through the Republican-controlled Legislature this session. In the end, several Democrats also supported it. Geoff Bartsh, Medica vice president of individual and family business, said in a statement Monday that the law does not change the company’s immediate plans for the Iowa market.
Still, Bartsh called the law “a hasty solution that will benefit a select few at the cost of others.”
“Markets don’t work when some get to play by a different set of rules,” he said. “There are consequences.”
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