Iowa is moving forward with a controversial new plan to exempt certain health plans from Obamacare regulations.

Two days ago, Iowa Gov. Kim Reynolds signed a bill that allows certain health plans to discriminate against those with preexisting conditions and exclude certain benefits, anything from prenatal care to prescription drugs.

It does this in a way that most experts think is perfectly legal — by making clear in new legislative language that these products are not health insurance. The insurance department in Iowa won’t regulate these plans as health plans. Therefore, they don’t have to play by Obamacare rules.

So while Idaho had its plan for expanding non-Obamacare plans rebuffed by the federal government, Iowa seems to be pursuing a more legal path to a similar outcome. It’s one that other conservative states are likely to notice and possibly replicate.

Under the Affordable Care Act, health insurers aren’t allowed to screen enrollees for certain health conditions. They’re barred from rejecting patients who they expect will have especially high costs.

Iowa’s new plan creates a carve-out for the Iowa Farm Bureau, a long-standing agricultural association that has historically served the state’s farming communities. It says organizations like this one can offer something called a “health benefit plan” that is explicitly not health insurance. So it can do things like offer coverage for doctor visits — but it won’t have to abide by Obamacare insurance rules.

Here’s how the law puts it: “a health benefit plan sponsored by a nonprofit agricultural organization domiciled in the state for its members shall not be deemed to be insurance and shall not be subject to the jurisdiction of the commissioner of insurance.”

Members of the Iowa Farm Bureau do not, in fact, have to be farmers. Instead, the expectation is that the Farm Bureau will use this new law to offer skimpier coverage with cheaper premiums to healthy Iowans. It will have the ability to screen out sick people, as the Farm Bureau can set its own conditions of who can and can’t be a member of its organization.

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Iowa actually isn’t the first state to create this kind of carve-out for Farm Bureau plans.

Tennessee was already doing this before Obamacare became law — and continues to exempt Farm Bureau plans from health insurance regulations up to present day. This can help give us a bit of a preview of what Iowa’s insurance market might look like under these new rules.

Georgetown’s Sabrina Corlette has written on the Tennessee Farm Bureau plans and finds evidence that they do get decent enrollment. Officials there told her they had about 25,000 members in 2017.

These people have to pass underwriting conditions, meaning the Farm Bureau can ask them questions about their preexisting conditions and reject the people it expects to have high costs. This means it’s almost certainly just healthy people enrolling in Farm Bureau products.

And that might help explain, as Corlette writes, why Tennessee has had one of the sickest populations enrolling on its Obamacare marketplace:

A recent Society of Actuaries report found that, in 2015, the population enrolled in individual market ACA-compliant plans in Tennessee had the worst overall health risk score in the country.[ii] It’s impossible to say for certain whether, by siphoning healthy enrollees away from the ACA’s marketplace, the Tennessee Farm Bureau plans have contributed to the poor risk score of Tennessee’s marketplace and the financial struggles of insurers selling ACA-compliant plans. However, overall enrollment in the Tennessee marketplace is approximately 230,000. If the significant number of lives covered by the Farm Bureau’s non-ACA compliant plans were part of that pool, it may very well improve the overall balance of healthy and sick in the Tennessee individual marketplace.

Tennesse’s unhealthy marketplace isn’t an especially attractive market for health insurance plans, which generally want to have healthier enrollees that can drive down overall insurance premiums. There was a months-long stretch last year where zero health plans wanted to sell coverage in the 16 counties around the Knoxville area. (An insurance plan did eventually come in, offering one option for that area.)

And this is one of the big risks in Iowa. Last year, the state had just one health insurance plan selling coverage on its marketplace, a Midwestern carrier called Medica. The insurer said in a statement that the new Farm Bureau products don’t change their current plans to sell coverage on the Iowa marketplace, but that they do worry about increased premiums as healthy enrollees may exit the market.

“This does not change our immediate plans for the Iowa market,” Medica’s Geoff Bartsch said in a statement provided to Vox. “We understand the sense of urgency to help those struggling with the costs of insurance. But this is a hasty solution that will benefit a select few at the cost of others. Markets don’t work when some get to play by a different set of rules. There are consequences. Today, healthy farmers should be happy while everyone else may wonder why their costs continue to be high.”

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