Trump Administration Causes Insurance Spike in Iowa and Blames It on Obamacare

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Iowa’s GOP governor Kim Reynolds wanted relief from a pending premium spike caused in no small part by the president. But the president’s people said no. Photo: Scott Eells/Bloomberg via Getty Images

An application for a far-reaching waiver from Obamacare regulations was withdrawn in a joint decision by the Trump administration and the state of Iowa today. Obamacare proponents feared that granting the waiver would lead to the unraveling of that legislation’s main underpinnings. President Trump feared that granting the waiver would make Obamacare look better.

Both Trump’s health-care-regulation chief Seema Verma and Republican governor Kim Reynolds agreed to blame the waiver’s failure all on Obamacare.

Gov. Kim Reynolds (R) said in a joint statement with Centers for Medicare & Medicaid Services Administrator Seema Verma that ObamaCare’s rules are too restrictive for the request to work. 

“Iowa pursued state flexibility through the Stopgap Measure, but ultimately, Obamacare is an inflexible law that Congress must repeal and replace,” Reynolds and Verma said. 

Aside from the fact that they could have reached this conclusion months ago (it’s not like Obamacare has changed this year), the “let’s blame Obamacare” spin continues to be undermined by reports Trump himself ordered the waiver’s rejection on grounds that it would help Obamacare work.

Yes, it’s a pretty convoluted situation. Taking seriously widespread speculation that the Trump administration would be quicker than its predecessor to give states leeway to suspend specific Obamacare requirements so long as they meet its major objectives, Iowa applied for a very broad “super-waiver” under a “state innovations” section of the Affordable Care Act.

It was indeed a reach: The proposed waiver sought to head off a huge premium increase by the one Obamacare private insurer left in the state by eliminating many basic features of Obamacare and also authorizing very large out-of-pocket expenses for consumers. In many respects, it would have taken the individual insurance market back to the pre-ACA status quo ante, where ability to pay would deny people who don’t qualify for Medicaid meaningful access to health coverage. Indeed, the single biggest thrust of the Iowa plan appeared to be holding down premiums for higher-income consumers and giving them access to the public subsidies that Obamacare limited to low-income consumers. In a way, the waiver scheme’s attempt to “fix” Obamacare was like attempting to treat a broken arm by amputating it.

But because it would “prop up” an Obamacare program he kept pronouncing as “dead,” the president reportedly instructed HHS to deny it. One of multiple ironies here is that Trump himself had contributed significantly to the premium spike in Iowa by refusing to promise to continue reimbursements to insurers for cost-sharing-reduction subsidies they were required to give low-income consumers, and then, more recently, killing the CSR payments altogether. And when a Republican Iowa governor tried to respond with the classic conservative formula of encouraging high-deductible health-care plans that cover less, the administration said no to that, too.

So long as Trump continues to oppose the Alexander-Murray legislation to restore CSR payments and to make broader state-waiver applications even more welcome — that’s the quid pro quo in the legislation — then Iowa is indeed stuck with a premium spike. And no matter how loudly Republicans in Des Moines and Washington try to blame Obamacare, it’s their own president’s mess now.

Trump Causes Insurance Spike in Iowa, Blames Obamacare