Trump administration urges states to undercut ACA pillars

WASHINGTON - The Trump administration is urging states to tear down pillars of the Affordable Care Act, demolishing a basic rule that federal insurance subsidies can be used only by people buying health plans in marketplaces created under the law.

According to advice issued Thursday by federal health officials, states should be free to redefine the use of those subsidies, which began in 2014. They represent the first help the government ever has offered middle-class consumers to afford monthly premiums for private insurance.

States could allow the subsidies to be used for health plans the administration has been promoting outside the ACA marketplaces that are less expensive because they provide skimpier benefits and fewer consumer protections.

In an even more dramatic change, states could let residents with employer-based coverage set up accounts in which they mingle the federal subsidies with health care funds from their job or personal tax-deferred savings funds to use for premiums or other medical expenses.

If some states take up the administration's offer, it would undermine the ACA's central changes to the nation's insurance system, including the establishment of nationwide standards for many kinds of health coverage sold in the United States.

Another goal of the ACA - often called Obamacare, the sprawling 2010 law that was President Barack Obama's preeminent domestic accomplishment - was to concentrate help on people using the individual insurance market because they do not have access to affordable health benefits through a job.

Prices were often out of control and discrimination against unhealthy people was more prevalent before the ACA imposed required benefits, prohibited insurers from charging more to people with preexisting conditions and created a federal health exchange and similar state-run marketplaces in which private insurance companies compete for customers.

The ACA health plans have been the only ones for which consumers can use the subsidies, which are tax credits designed to help customers with incomes up to the middle class - 400 percent of the federal poverty line - afford the premiums.

The new advice, called "waiver concepts" because they are ideas for how states could get federal permission to deviate from the law's basic rules, stray from those goals.

Significantly, they would allow states to set different income limits for the subsidies - higher or lower than the federal one - and, if a state wanted, base the amount of help on a resident's age, not income.

In a statement Thursday, HHS Secretary Alex Azar said, "The Trump administration is committed to empowering states to think creatively about how to secure quality, affordable healthcare choices for their citizens."

In a midday speech before a gathering of the conservative American Legislative Exchange Council, Seema Verma, the head of the Centers for Medicare and Medicaid Services, delivered a broadside against the health care law in explaining the rationale for freeing states to rework health policies on their own.

Two top House Democrats, Reps. Richard Neal of Massachusetts, ranking minority-party member of the Ways and Means Committee, and Frank Pallone of New Jersey, his counterpart on Energy and Commerce, dispatched a letter Thursday to the secretary of HHS and two other Cabinet members in which they contended that the waiver concepts are illegal.

They wrote that the suggestions "exceed the secretary's statutory authority" and are "contrary to the plain language" of the ACA.

Neal and Pallone asked for answers to a series of questions to justify the substance of the changes and the method, which bypasses the usual process for changing regulations.

Credit: By Amy Goldstein - The Washington Post

Caption: According to advice issued by federal officials, states should be free to redefine the use of ACA subsidies.

Susan Walsh/AP