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"Pre-existing conditions" popping into midterm ads
06:14 - Source: CNN
CNN  — 

The Trump administration is throwing open the door to states to make major changes to their Obamacare markets.

States can now apply for newly broadened waivers to create alternatives to the Affordable Care Act program, the Centers for Medicare and Medicaid Services said Monday. They could use this enhanced power to determine who gets financial assistance to pay premiums and to change what types of coverage are prioritized in the individual market.

The announcement comes just two weeks ahead of the midterm elections. Health care ranks as one of Americans’ top priorities, prompting candidates to attack each other on who would do more to reduce costs and protect those with pre-existing conditions.

The move will increase affordable insurance options, while retaining protections for those with pre-existing conditions, said CMS Administrator Seema Verma.

“The guidance that was in place before was really too restrictive and was thwarting innovation,” Verma said. “We feel like this version provides that level of flexibility.”

She added that the administration’s goal was “to get states out from under Obamacare’s onerous rules.”

Health policy experts, however, immediately countered that it could leave low-income, older or sicker residents with fewer choices and higher costs while favoring the young and healthy.

The Trump administration has taken repeated steps to weaken Obamacare through smaller regulatory changes after Republicans in Congress failed to repeal the landmark 2010 health reform law last year. It has broadened access to two types of insurance policies that could come with lower premiums but provide fewer benefits than those found on the Affordable Care Act exchanges. It has also allowed states to impose new mandates – particularly work requirements – on Medicaid recipients.

Perhaps the biggest change states could enact would involve who would receive Obamacare’s federal premium subsidies, which have been critical to sustaining enrollment in recent years. Currently, subsidies can only be used to buy policies on the exchanges and can only go to those who earn less than 400% of the poverty level (just over $48,500 for a single person or $100,000 for a family of four).

States could file waivers asking to provide subsidies to those buying short-term health plans, for instance, Verma said on a call with reporters. The Trump administration is pushing these policies, which have terms of less than a year, as a more affordable alternative to Obamacare. These plans typically have lower premiums so they could be more attractive to younger and healthier people who may not need all of the benefits required under Obamacare.

However, short-term plans are allowed to exclude people with pre-existing conditions. Obamacare advocates fear these plans will siphon off those with fewer health care needs, pushing up premiums for the sicker enrollees left in the exchanges.

States could also use the waivers to encourage more coverage among younger and healthier residents, Verma said. The agency will also work with states on options for insuring high-cost residents, which could help lower premiums for everyone.

Until now, seven of the eight state waivers that have received approval have been used to implement reinsurance programs, which help protect insurers against very sick enrollees. These programs have contributed to the 1.5% drop in the average premium for the Obamacare’s 2019 benchmark plan, which President Donald Trump has repeatedly and inaccurately taken credit for on the midterm campaign trail.

The administration also made some key adjustments to how waivers would be evaluated. Requests will now be judged on how they affect coverage and affordability for residents in the state as a whole, rather than for specific groups of people, such as the poor or the sick. It emphasizes “access” to coverage, a favored Republican talking point.

The guidance takes effect immediately, but it will take time for states to file and gain approval for these waivers. The changes will not affect open enrollment for 2019, which begins on November 1, though they could be in place for 2020, said Verma.