How Iowa’s new law gets around ACA insurance requirements

Iowa Gov. Kim Reynolds signed legislation into law to allow health plans which don’t comply with Affordable Care Act (ACA) regulations with a new kind of strategy: Defining some insurance plans as something other than health insurance.

Under the new law, “health benefit plans” offered a nonprofit agricultural organization “shall be deemed not to be insurance,” according to the Washington Post. In this case, it opens the door to the Iowa Farm Bureau to offer plans through the state’s largest insurer, Wellmark, to sell plans which can revive elements of pre-ACA insurance design on the individual market, like rejecting customers based on pre-existing conditions.

The result will be less expensive plans available to anyone who is already a member of the Iowa Farm Bureau or pays its $55 annual fee to join. Reynolds said it will restore the healthier individual market that existed in the state before the ACA left it “in collapse.”

Without the individual mandate penalty for failing to buy ACA-compliant insurance, more states could pursue options to open up loopholes for consumers.

“If the ACA’s insurance rules can’t be repealed, then an alternative is to get people the option of escaping them,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “Without the penalty, the door is wide open for plans like this.”