Iowa Law Takes Pathway Around Affordable Care Act

Author: David B. Weisenfeld, XpertHR Legal Editor

April 27, 2018

Iowa has passed a controversial law stating that not all health plans actually qualify as health insurance. The new law will allow the Iowa Farm Bureau to collaborate with Wellmark Blue Cross and Blue Shield, the state's largest insurer, on self-funded "health benefit plans" that will not have to comply with federal requirements because they are not deemed to be insurance.

While Congress failed in its attempts to repeal or replace the Affordable Care Act (ACA), this new Iowa law may be viewed as a model by ACA opponents that wish to offer less comprehensive coverage. The state law contends that the health benefits plans that the Farm Bureau and Wellmark will offer qualify as a separate product rather than health insurance. The plans could be offered as soon as this fall.

Iowa's ACA exchange had one of the lowest enrollment rates in the US last year with only one insurer, Medica, offering coverage. Medica had reportedly raised its prices by an average of 57 percent.

In a statement, Iowa Governor Kim Reynolds said, "Because of this bill, thousands of Iowans will now have affordable health care coverage." But that coverage comes with a cost for some individuals.

Unlike the ACA, the Iowa law will let Wellmark check to see if applicants for coverage had any pre-existing medical conditions, noted Geoff Bartsch, a vice president for Medica. He called the new state law "beyond anti-competitive" and said the health plans will "cherry-pick" only the healthiest customers.

It remains to be seen if the Iowa law will spark a trend in states that are seeking legal alternatives to the ACA's rules and regulations.