Bill Would Allow Farm Bureau to Offer Non-ACA Compliant Health Benefit Plans
Last fall, we wrote about the health care crisis facing many Iowa farmers and other small business owners. Many of those with incomes above 400 percent of the federal poverty limit faced 2018 health care insurance premiums surpassing $30,000 per year on the individual market. Consequently, many have been left with few options in 2018.
As of February 13, 2018, the Iowa Insurance Division reported that only 46,563 Iowans had enrolled in coverage through ACA-compliant individual policies for 2018. Of those, 41,742 received government subsidies. In 2017, about 72,000 Iowans purchased ACA-compliant policies on the individual market. Approximately 26,000 Iowans who purchased individual polices in 2017 did not purchase them in 2018. Some sought ways to receive group health care coverage under an employer-provided plan, others enrolled in health care sharing ministries, and others have been left with no insurance at all.
Enter SF 2329. On March 9, 2018, the bill passed the Iowa Senate by a vote of 40-9. It is now under consideration by the House.
SF 2329, characterized by its Senate floor manager as a “test model,” would allow Iowa Farm Bureau to offer “health benefit plans” to its members. These plans would “not be insurance” and would not be subject to Affordable Care Act requirements or to Iowa Insurance Division jurisdiction. The plans would be self-funded and administered by Wellmark Blue Cross & Blue Shield. The legislation says little else so much is unknown about what these “health benefit plans” would comprise.
Proponents suggest that these plans would provide an option to those self-employed Iowans who can no longer afford coverage. They stress that the only other choice for many of these Iowans is no coverage at all. Opponents argue that allowing these plans would lead to further premium increases in the ACA-compliant market by drawing healthy people away from the individual market, leaving only high-cost insureds with pre-existing conditions. Anyone who joins Iowa Farm Bureau (for a $55 membership fee) would be eligible to apply for coverage under a new health benefit plan. Farm Bureau, however, would be allowed to turn away applicants who do not meet their underwriting standards. They could also base premium cost upon health status. For those who enroll, however, the cost of these plans would likely be significantly lower than the non-subsidized cost of plans currently offered through the individual healthcare exchange.
This Iowa legislation is largely modeled after Tennessee law that has, since the ACA went into effect, allowed Tennessee Farm Bureau to continue to offer traditional health plans to individuals outside of the ACA marketplace. These plans are not “health insurance,” and are not required to meet ACA requirements. As such, these plans are medically underwritten, and subscribers must pay the individual mandate, which is required by federal law through 2018 for those without health care insurance who do not have an exemption.
In 2017, Tennessee Farm Bureau offered 23,000 underwritten individual plans. It also offered 25,000 ACA-compliant plans and 50,000 grandfathered plans.[i] Some in Tennessee have argued that allowing Farm Bureau to offer these plans has increased the instability of its individual healthcare market. 228,646 individuals enrolled in private plans in 2018 through the Tennessee health care exchange. Tennessee has just over twice as many residents as Iowa.
Lots of Unknowns but Few Other Options
The difficulties states are facing with their individual health insurance markets is a federal problem that must be addressed by federal law. Because no federal law has been forthcoming, however, Iowa lawmakers are attempting to find an interim solution for those Iowans who simply cannot afford a health insurance policy. In large part, these are Iowans who have always purchased their own individual health insurance coverage, long before it was mandated by federal law. In 2018, however, they were priced out of the market, largely because they made too much money to qualify for the generous federal subsidies. With SF 2329, lawmakers have turned to a partnership that before ACA provided the majority of individual health insurance policies to rural Iowans for decades: Iowa Farm Bureau and Wellmark Blue Cross & Blue Shield.
But there are many unknowns. SF 2329 does not set forth any plan requirements or underwriting limitations. Rather, it merely authorizes Farm Bureau and Wellmark, which are not named by name but are the only organizations that meet the law’s requirements, to begin offering new non-ACA compliant health benefit plans. There is no provision for minimum plan requirements or for resolving coverage disputes. Presumably, these details would be written into the plans, and disputes would be handled primarily through contract law.
If the law is passed, it is likely to face legal challenges, perhaps from other insurers and perhaps from consumers and organizations that represent them.
The future of healthcare insurance is uncertain across the nation. This bill is designed to provide a healthcare option to thousands of Iowans who currently have none. Federal lawmakers, however, must ultimately act to provide long-term stability and ensure options for all down the road.
In the meantime, we will keep you posted on the fate of SF 2329.
[i] Iowa Farm Bureau has continued to provide plans not compliant with ACA to approximately 70,000 Iowans. These plans, both grandfathered and grandmothered, are considered insurance plans and have been allowed to continue under the Affordable Care Act. The grandmothered plans are those that were first purchased after the ACA was signed into law, but before it was fully effective. Transitional rules have allowed these plans to continue; however, they are slated to expire for good at the end of 2018. Many of these insureds would be left without other affordable insurance options. Grandfathered plans, in contrast, are those that were in force when the ACA was passed in 2010. These plans can continue, as long as they are not substantially changed through, for example, an increase in the cost-sharing percentage or an elimination of benefits.
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