As goes Iowa, so goes the nation — or at least that’s the conventional wisdom during presidential elections. Let’s hope the same rule applies to healthcare reform.
Earlier this month, Iowa Gov. Kim Reynolds signed a law that takes advantage of a major loophole in Obamacare. The legislation, based on a similar effort in Tennessee, enables any Iowan to enroll in a “health benefit plan” sponsored by the Iowa Farm Bureau. Due to a legal technicality, the plans aren’t subject to Obamacare’s premium-inflating regulations.
The reform is a laudable attempt to give consumers an affordable alternative to the plans for sale on Obamacare’s exchanges. Until Congress makes good on its promise to repeal and replace the law, other states can liberate their residents from the law’s financial burdens by following Iowa’s lead.
Obamacare’s mandates have made affordable coverage all but unattainable across the country. Health insurance policies must cover a long list of “essential health benefits.” These include everything from maternity care to pediatric dental services to substance abuse treatment. Patients who don’t want such comprehensive benefits don’t have a choice.
That’s the equivalent of forcing all restaurant patrons to purchase a three-course meal — complete with wine pairing and dessert — even if they just want a much more affordable bowl of soup.
Obamacare also makes it nearly impossible for insurers to manage risk and keep costs down. The law prohibits insurers from charging older, sicker patients more than three times what they charge younger, healthier ones. And they’re required to accept all customers, even severely ill ones who are guaranteed to cost them more than they can ever hope to collect in premiums.
To compensate for these higher costs, insurers have repeatedly raised premiums. Since the Obamacare marketplaces opened in 2014, average premiums on the individual market have more than doubled.
Iowans have had to deal with some of the highest premium increases in the country. In 2013, before the state’s exchange was up and running, the average monthly premium for a non-group policy was $251. By contrast, average monthly premiums in the individual market on Iowa’s HealthCare.gov exchange last year totaled $526 — an increase of 110 percent.
Premiums continued to soar in 2018, when the lone insurer on the state’s exchange increased rates for mid-level silver plans by more than 57 percent. Facing sky-high premiums and only one insurer to “choose” from, an alarming number of Iowans — 26,000, according to Gov. Reynolds — left the individual insurance market in 2018.
The reform the governor signed into law earlier this month will give patients an affordable coverage option. It permits the Iowa Farm Bureau and Wellmark Blue Cross Blue Shield to join forces to sell “health benefit plans.” To buy the plans, consumers must be members of the Iowa Farm Bureau, a grassroots non-profit organization. All Iowans are eligible to join.
The plans are not technically health insurance. According to the law, “a health benefit plan sponsored by a nonprofit agricultural organization domiciled in the state for its members shall not be deemed to be insurance and shall not be subject to the jurisdiction of the commissioner of insurance.”
Since they’re not classified as health insurance, the Farm Bureau plans are exempt from Obamacare’s insurance mandates and regulations. The Farm Bureau can decide which benefits to offer based on its members’ needs. It can also deny coverage to high-cost enrollees to keep premiums down.
As a result, health benefit plans will have far lower premiums than the policies available on the exchange.
Other states that have contemplated evading Obamacare’s many regulations — most recently Idaho — should consider following Iowa’s lead.
The move is reminiscent of a provision in President Trump’s October 12 Executive Order instructing the Department of Labor to come up with rules that would allow self-employed workers and small businesses to band together to buy coverage through so-called Association Health Plans. Like Iowa’s health benefit plans, they aren’t subject to Obamacare’s mandates.
Any policy that allows consumers to escape the crushing premiums and dwindling options of Obamacare’s exchanges — without violating the law — should be welcomed. Of the more than 27 million Americans without insurance, 45 percent cite the high cost of health plans as the reason they aren’t covered. Americans ranked healthcare access and affordability as their top concern in a recent Gallup poll.
Kudos to Iowa lawmakers for making health benefits affordable again. Until Congress fulfills its promise to fully repeal Obamacare, Americans can only hope that their own state leaders follow Iowa’s lead.