Bill Allowing Health Plans Not Compliant with Affordable Care Act Goes to Iowa Governor's Desk

Mar 27, 2018

A bill to allow cheaper health plans that don’t comply with the federal Affordable Care Act passed the Iowa Senate Tuesday and is heading to the governor’s desk.

Supporters say the new plans—offered through a Farm Bureau partnership with Wellmark Blue Cross Blue Shield—would be a cheaper health care option for people who can’t pay the increasing price of insurance under the ACA.

“This bill is about getting those folks insured,” says Sen. Dan Zumbach, R-Ryan. “It’s a great investment.”

It also allows small businesses to join together to buy health insurance for their employees, known as association health plans.

The bill passed 37-11 with votes from both parties, but some Democrats say they are disappointed the state isn’t planning to analyze the results of this new program if the governor signs it into law. 

“I can tell you that actually, this is how it was before the Affordable Care Act,” says Sen. Mark Chelgren, R-Ottumwa. “So we have tried this before. This is how the system worked. In the past, we gave choice to Iowans.”

The bill claims these health plans are not insurance, so they don’t have to comply with the federal health care law. It is possible people with pre-existing health conditions could be charged more or denied coverage under this policy.

Senate Democratic Leader Janet Petersen says the Farm Bureau health benefit plans don’t ensure coverage of maternity care or other health services included in federal law.

“This is not insurance. It is a health benefit that Iowans are hoping will give them the coverage that they may need,” Petersen says. “This is not regulated by the insurance commissioner.”

The ACA also mandates that health insurance covers mental health and substance abuse treatment, prescription drugs and hospitalization, among other things. The plans proposed by the Iowa Legislature don’t guarantee this coverage.

“We appreciate the Farm Bureau putting forth an idea similar to what Tennessee has done to provide an alternative choice to their members,” writes an Iowa Insurance Division spokesman in an emailed statement.

Critics say the legislation would further weaken Iowa’s struggling individual insurance market. The Iowa Insurance Division estimates up to 26,000 Iowans who don’t receive federal subsidies to help pay for their insurance have stopped buying it this year as prices rise.

More healthy people could forgo their ACA-compliant health insurance and choose the Farm Bureau plans instead. According to the left-leaning Center on Budget and Policy Priorities, that would further drive up the cost of insurance for people who buy insurance through the ACA.