Idaho Insurance Machinations Draw Alarm in Senate

WASHINGTON (CN) - Concerned that insurers are starting to take advantage of health care upheaval in Washington, Democrats raked the secretary of Health and Human Services over the coals Thursday about new Blue Cross plans in Idaho.

"I've got the application here," said Oregon Senator Ron Wyden. "It looks all about finding out if people have pre-existing conditions so they can discriminate against them, charge them more.”

Blue Cross announced just the day before in Idaho in response to an executive order there by Governor Butch Otter that called for "creative ways" to expand the state exchanges beyond those set up in the health care law known as the Patient Protection and Affordable Care Act.

Though Blue Cross said its plans would serve 110,000 uninsured middle-income Idaho residents, Wyden called the plans "junk insurance” Thursday at a Senate Finance hearing on the budget.

HHS Secretary Alex Azar II, the sole witness, said he had not seen any of the plans or received a waiver request from Idaho.

"I can assure you that if we do receive that, and it does progress forward, we’ll be looking at that very carefully and measuring it up against the standards of the law, as is our duty," Azar said.

Wyden noted, however, that Idaho is not asking for permission or seeking a waiver from HHS: It thinks it can do this on its own.

"This is going to be a question of whether the department is going to say federal law - which protects people from discrimination against pre-existing conditions - controls, or Idaho can start something that just moves America back towards yesteryear where we can have insurers beat the stuffing out of people with a pre-existing condition," Wyden said.

Bret Rumbeck with Blue Cross Idaho did not return an email requesting the plan details and comment on whether the plans comply with the Affordable Care Act.

Wyden asked Azar to inform him within 10 days how Health and Human Services will pursue the matter.

Azar indicated that he would need more than 10 days, to allow Idaho to set its own policy according to state law. The plans still need to be approved by the Idaho Department of Insurance, and Blue Cross said it will still offer plans that comply with the Affordable Care Act.

"I'd be happy to work with you and be very transparent about that process,” Azar said. “I just don't want to prematurely be involved before there's even a matter in controversy at the state level.”

Azar said Idaho might not approve the plans and it's unclear whether the plans would be certified as compliant with the Affordable Care Act.

"So it's really just a question of timing," Azar said. "I can assure you we'll be looking, at the right time, searching against the legal requirements."

Weighing in on the controversy after the hearing, Kaiser Family Foundation vice president Gary Claxton said he hasn't seen the plans but that the approach could further destabilize the markets and drive up premiums for those who stay on Affordable Care Act plans.

"Generally, the approach would lead to healthier people leaving the ACA compliant plans, particularly during the next open enrollment, which would likely cause premiums in those plans to increase," Claxton said in an email, abbreviating the Affordable Care Act.

Many of the concerns Claxton voiced overlapped with those that Wyden brought up at Thursday’s hearing.

"At a broader level, failure by HHS to enforce against what appears to be a patently unlawful action might encourage other states to follow, which could destabilize markets in other states as well," Claxton said.

A repesentative for Health and Human Services said in an email that the department is monitoring the Idaho plans.

“HHS is committed to working with states to give them the flexibility to provide their citizens the best possible access to healthcare, within the bounds of the law," the spokesperson said.

Idaho Senator Mike Crapo, a Republican defended the new plans in his state.

"This is like Groundhog Day," he said. "Every time a new idea for how to fix the health care system comes out it's accused of eliminating [coverage for] pre-existing conditions, as well as every other possible attack that can be dreamed up against it."

Crapo said states have been motivated by the elimination of the mandate to now seek more flexibility to experiment.

"The idea that that is a direction we should choke off right at the beginning is one that I resist," Crapo said.

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