Join our guest blogger, Stephanie Berry, as she unpacks state reactions to the removal of the ACA’s individual mandate. 

Stephanie is a Senior Legislative and Policy Analyst based in Sacramento, California.

As we reported recently, ending the penalty for individuals who choose not to purchase medical coverage (the individual mandate) could further destabilize the individual market. However, state policymakers aren’t waiting for further federal action on the ACA — leading to a notably active regulatory year as states are taking matters into their own hands. Here’s a summary of activity:

Weakening ACA regulations

Idaho unveiled a plan that openly defies the ACA by announcing earlier this year that the state would allow health plans to be offered that don’t comply with the ACA’s regulations on pre-existing medical conditions, essential health benefits, annual caps on benefits, and other key tenets of the law. These plans, of course, would be quite a bit cheaper than ACA plans and are designed to attract younger, healthier individuals. Because Idaho announced its intention to skirt ACA regulations, the federal government responded that it would step in and enforce the law if the state followed through with its plan.

Similarly, the Iowa legislature enacted a bill that allows non-ACA compliant plans to exist by creating an exemption for plans offered by the Iowa Farm Bureau, an association that is meant to serve Iowa’s farmers. To pass federal muster these plans cannot be called health insurance and therefore, cannot be regulated by the federal government or the Iowa Department of Insurance. It is likely that we will see other states follow suit.

Establishing reinsurance programs

Several states have introduced legislation to create state reinsurance programs — a way for carriers offering individual health insurance to get compensated for covering high healthcare costs. While bills are making their way through the legislatures in Louisiana, New Jersey, and other states that would require the state to apply for a federal waiver, Maryland has already enacted legislation that will support a reinsurance program by levying a surcharge on medical and dental carriers. This enacted legislation was designed to mirror the federal tax that was suspended for 2019.

Imposing state individual mandates

Finally, state legislatures — particularly those with state-based exchanges — are attempting to impose their own individual mandate that would require individuals to maintain health care coverage or pay a penalty. Legislation has been introduced in Connecticut, Vermont, New Jersey, Maryland, and Washington, but currently, only New Jersey’s bill — AB 3380 — appears close to enactment, while the bill in Washington has already died. It remains to be seen whether these individual mandate bills will be able to gain more traction this year or next.

Stay tuned for more health care policy updates from Delta Dental, and get to know our policy experts.

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