Blue states are defying the Trump administration in a bid to protect ObamaCare and keep their insurance markets stable.
Several states, including California and Maryland, are looking to put limits on short-term insurance plans, even as the Trump administration is poised to expand access to them nationwide.
The states are doing so because they fear the availability of the short-term plans will drive up premium costs for ObamaCare.
On another front, Vermont and New Jersey have passed state laws that require people to buy health insurance. These individual mandate laws are meant replace the now-repealed federal requirement.
Advocacy groups and state officials that back the measures say the states are seeking to protect advances made under ObamaCare from attacks by the Trump administration, which sought to repeal and replace the law and, failing that, has tried to chip away at it.
“States are determined to safeguard the gains they’ve achieved,” said Stan Dorn, a senior fellow at the advocacy group Families USA. “There’s a lot of interest in making sure the achievements of [ObamaCare] are not in danger, states protecting their residents from federal sabotage.”
Costs are a big driver in the efforts by states.
The cost of health insurance premiums on the ObamaCare exchanges is projected to jump in the coming weeks and months. Some states could see major double-digit spikes next year.
The high costs are blamed on actions the administration has taken that could cut into ObamaCare’s enrollment.
“There’s been a series of actions taken by the current administration that have undermined enrollment,” Chet Burrell, president and CEO of CareFirst BlueCross BlueShield, said when he announced a potential 26 percent premium increase for next year in Maryland.
The elimination of the individual mandate penalty as part of the GOP tax-reform bill is one of the main drivers of premium increases. So is the expansion of short-term plans that do not meet ObamaCare requirements.
Some efforts by states to fight the administration are easier than others.
Imposing a state individual mandate to replace the federal one might have the most impact, but it’s also the most politically difficult.
“The mandate is not a particularly popular provision. People like the effects that come from it, but asking legislators to vote for [forcing] people to buy insurance is not always attractive,” said Gary Claxton, a vice president at the Kaiser Family Foundation.
Nonetheless, New Jersey’s newly-elected Democratic governor signed a bill on May 30 to impose an individual mandate for health insurance, becoming only the second state to require health-care coverage and impose a penalty on residents without it.
Massachusetts first imposed a mandate in 2006 as part of then-Gov. Mitt Romney’s (R) health reform plan, which served as a model for ObamaCare.
Vermont’s Republican Gov. Phil Scott also signed an individual mandate bill in late May, but it won’t take effect until 2020 and many of the details, including the penalty and enforcement mechanisms, still need to be decided.
Maryland lawmakers discussed passing a mandate law for 2019, but ultimately only passed a commission to study it.
Al Redmer Jr., Maryland’s insurance commissioner, said he was skeptical of the impact an individual mandate would have on premiums.
Redmer said ObamaCare’s mandate was criticized as ineffective because the penalty was too small.
“If that’s true … you’d have to think there’s not much difference between an ineffective one and no mandate,” Redmer said.
It might be easier for states to fight the expansion of short-term insurance plans.
In February, the administration proposed rules that would allow people to buy short-term health insurance for up to 12 months, lifting restrictions from the Obama administration that limited the coverage to a maximum of three months. The plans would also be renewable.
The short-term plans don’t need to meet ObamaCare’s consumer protections, so they would potentially be much cheaper than a traditional plan. But people with pre-existing conditions can be charged more.
In addition, the plans to do not have to comply with ObamaCare mandates for covering certain services, such as mental health treatment or prescription drugs.
Allowing plans to operate outside ObamaCare’s protections will create a “shadow insurance market” that will siphon healthy people away from ObamaCare plans and increase costs, said Dorn.
The final policy is expected to be released in the coming weeks, but some state lawmakers are already pushing back.
California passed a bill that would completely prohibit the sale of short-term plans beginning in 2019, but it has yet to be signed into law.
Lawmakers in Hawaii passed a bill that would essentially eliminate the state’s short-term health plan market by prohibiting their sale to anyone eligible for a plan on the ObamaCare exchange. That bill is also awaiting the governor’s signature.
Maryland’s GOP Gov. Larry Hogan recently signed a bill that limits short-term plans to three months, and prohibits their renewal.
Redmer said he sees the short-term plan bill as merely returning to the status quo. He added that state lawmakers were worried about “adverse selection” if they allowed the administration’s proposal to impact their state.
“The legislature has been protective of citizens,” Redmer said. Lawmakers want to avoid creating situations where the insurance market will be negatively impacted, and “adverse selection will always result in increased premiums.”