The battleground over health care has moved out of the national sphere and into state politics. Trump administration policies have rolled back consumer protections from the Affordable Care Act, including the repeal of the individual mandate through tax reform and the decision to permit insurers to offer deregulated, short-term insurance plans. This only furthers the trend set in motion after the 2012 Supreme Court decision that led to some states refusing to expand Medicaid, creating a patchwork of health care systems, neatly divided by state borders.
States continue to change their models: On May 30, Virginia became the 33rd state to pass Medicaid expansion through the state Legislature, and New Jersey became the second state, after Massachusetts, to adopt an individual health insurance mandate, which it did as a countermeasure to the repeal of the federal mandate. At the same time, Iowa is pushing forward on a plan to allow its Farm Bureau to sell skimpy “non-insurance” insurance plans to Iowans.
A paper published in March comparing U.S. health care spending with other high-income countries put the growing health care gap between states into context. Researchers from Harvard and the London School of Economics wrote: The life expectancy of Minnesota, a state comparable in size & demographics to Sweden or Denmark, has more similar population health outcomes to these countries than Minnesota has in comparison to Mississippi.
Recent federal rollbacks, and the subsequent response by states, have amplified these divisions in access, affordability, and coverage of health insurance between red and blue states. Blue states are creating their own laws to both expand coverage and serve as stopgap measures to block Trump administration moves from destabilizing their own individual insurance markets. Red states, on the other hand, are falling in line with federal positions on health care policy that would both limit access to Medicaid and erode risk sharing, leaving sicker patients to pay higher premiums.
Two Trump administration moves spurred the widening health care divide between red and blue America. In December, Congress passed tax cuts that repealed the federal individual mandate for health insurance, which previously helped distribute risk in the individual market by requiring all Americans to buy health insurance. In February, the Trump administration proposed extending the duration of “short-term” insurance plans to 364 days. These plans are usually meant as a temporary measure for those between jobs and don’t need to comply with ACA regulations, meaning they can offer high deductibles with barebones benefits and deny coverage to patients with pre-existing conditions. Both these measures could lead to an insurance death spiral. Young, healthy people will either buy skimpy, short-term insurance plans that come with cheaper premiums or forgo coverage altogether. Older and sicker people will be more concentrated in ACA marketplace plans and, because they are costlier to insurers, will face higher premiums. As premiums rise year over year, more individuals will be priced out of the market and lose health insurance until only the sickest remain.
Blue states immediately fought back. Following in the footsteps of New Jersey and Massachusetts, states like Maryland are considering imposing statewide individual mandates. Other states, including California, Illinois, and Washington, have either limited the duration of short-term insurance plans or banned them outright. After the federal reinsurance program ended in 2016, Alaska, Oregon, and Minnesota created their own reinsurance initiatives to bring down premiums for their residents. The reinsurance program in Minnesota has been so successful that, in contrast with the rest of the country, insurers in the state are seeking to decrease their premiums next year. Medicaid expansion in Virginia is simply waiting for the governor’s signature. Even Utah and Idaho, solid red states, are putting Medicaid expansion on the ballot.
In addition to balancing pushback from federal policy changes, some states are actively working to expand access to health care. Policymakers in New Mexico and Illinois are looking into proposals for a statewide public option to compete with private plans on the exchanges. California has begun inching toward proposals akin to single payer, including all-payer rate setting, which would set a single, fixed price that every private insurer pays for any given medical service.
As blue states are building their own path toward universal coverage, red states have remained on course with the Trump administration, imposing work requirements on Medicaid recipients and deregulating insurance markets. To date, the Centers for Medicare and Medicaid Services, or CMS, has approved waivers for instituting work and reporting requirements for Medicaid beneficiaries from four states: Arkansas, Indiana, Kentucky, and New Hampshire. At least 10 other states are considering similar waivers for their respective Medicaid programs. These reporting requirements could place an additional burden on Medicaid recipients, many of whom are often switching between jobs and homes, and cause them to lose coverage even if they are compliant.
Idaho and Iowa have gone even further. In January, Idaho Gov. Butch Otter signed an executive order allowing state health insurers to skirt key ACA consumer protections. People on these plans could be charged more for their or their family’s medical history, could hit an annual cap for medical benefits, and can be denied benefits altogether for not maintaining continuous coverage, all limitations that were banned by the ACA. Blue Cross Blue Shield, Idaho’s largest insurer, announced five new insurance plans that don’t comply with ACA regulations shortly thereafter. CMS subsequently sent Idaho an enforcement letter barring the move.
While Idaho’s bill was dead on arrival, Iowa is trying to carve a loophole to escape oversight from federal agencies. The Iowa bill states that the new coverage provided by the Farm Bureau would not technically be defined as health insurance, and thus not be regulated by Iowa’s insurance commissioner or federal insurance regulations. It has been two months since Iowa passed the law, but there’s been no response nor repercussion from the federal government. Other states, such as North Carolina, have begun to follow in Iowa’s footsteps, writing legal loopholes to skirt federal law. These policies could lead to the very same insurance death spirals that blue states are actively working to avoid.
All of this is to say that the health care gap between red and blue states is widening. People move for jobs, education, and family. They rarely move for affordable health care. But with health insurance premiums set to significantly rise again this fall, the compounding of state and federal action could make otherwise exceptional stories about moving for affordable care more commonplace.