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The Trump administration approved Monday allowing states to apply for waivers to the Affordable Care Act to offer alternative health insurance options, including cheaper and limited short-term plans.

The Centers for Medicare & Medicaid Services and the U.S. Treasury Department said the guidance allows states to “move their insurance markets away from the one-size-fits-all rules and regulations ... and increase choice and competition.”

The agencies said the waivers “ensure that people with preexisting conditions are protected” under what is also known as Obamacare.

Barry Smith, a spokesman for N.C. Insurance Department, said officials “are still reviewing the guidance issued by the Trump administration regarding ACA waivers to assess the potential impacts to North Carolinians. We hope to have further comment on the administration’s action soon.”

However, some advocates questioned the how the policies would handle preexisting conditions. The statement and accompanying fact sheet contained minimal details.

Some Republican-sponsored bills in Congress contain preexisting protection conditions language, but allow insurers to charge much higher rates for individuals for most health conditions.

Frederick Isasi, executive director of left-leaning advocacy group Families USA, said the new policy “shows, once again, that President Trump is not speaking the truth when he claims to protect people with preexisting conditions.”

“Instead, his administration showed its fierce determination to take protections away from people with health problems. The policy pours federal taxpayer dollars into the coffers of insurance companies that sell substandard coverage, free of consumer safeguards.”

Isasi said the nonpartisan Congressional Budget Office found that people with preexisting conditions “would either pay much higher premiums or be left unable to obtain insurance at all.”

Alex Azar, secretary of the federal Department of Health and Human Services, said states “will have a clearer sense of how they can take the lead on making available more insurance options, within the bounds of the Affordable Care Act, that are fiscally sustainable, private sector-driven and consumer friendly.”

Changing guidelines

The ACA allows for waivers “so long as the new state waiver plan meets specific criteria, or “guardrails.”

Those guardrails help guarantee individuals retain access to coverage that is at least as comprehensive and affordable as without the waiver, covers as many individuals, and is deficit neutral to the federal government.

To date, these limitations have effectively restricted state waivers to just one type, a reinsurance waiver.

The new guidance outlines five principles for states to follow as they work to develop innovative new approaches: provide increased access to affordable private market coverage; encourage sustainable spending growth; foster state innovation; support and empower those in need; and promote consumer-driven healthcare.

In June, the Republican-controlled General Assembly failed to advance a controversial Senate attempt to introduce a cheaper, skimpier and unregulated health insurance option, initially with nonprofits with a statewide presence.

The plans would not be considered as insurance, so certain state and federal insurance regulations wouldn’t apply to them.

“North Carolina has spent several years pursuing an alternative to Medicaid rules dictated by Washington,” said Mitch Kokai, policy analyst with Libertarian think tank John Locke Foundation.

A federal Medicaid waiver request was submitted by the McCrory administration in June 2016, which was amended Nov. 20 by the Cooper administration. Neither included Medicaid expansion.

Expansion could raise the number of eligible residents to 2.6 million, or about 26 percent of the state’s population.

State Republican legislative leaders, including Senate leader Phil Berger, R-Rockingham, continue to view Medicaid expansion as a nonstarter because of concerns about potential state responsibility for future federal administrative costs.

“North Carolina has been at the forefront in seeking solutions to the high cost of health insurance for our citizens,” N.C. Sen. Joyce Krawiec, R-Forsyth, said Monday.

“I welcome the opportunity for our health care experts in North Carolina to develop new ideas and improve service to our citizens.”

Kokai said that “it will be particularly interesting to see whether this new opportunity unites the Cooper administration and legislative leaders.”

“The two branches had diverged on the Obama administration’s Medicaid expansion plan, but a state-specific program free of the political taint of Obamacare might attract more bipartisan interest.”

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rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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