WASHINGTON — Alex M. Azar II, the new secretary of health and human services, said Thursday that he would closely scrutinize a plan by Idaho to allow the sale of insurance that does not comply with the Affordable Care Act, an early test of how he will enforce a law he opposes.
But he said it was too early to know what action he might take.
“We’ll be looking at that very carefully and measure it up against the standards of the law,” Mr. Azar said at a hearing of the Senate Finance Committee.
Democrats in Congress, as well as the American Cancer Society and other groups representing patients, say the Idaho plan would allow insurers to discriminate against people with pre-existing medical conditions, in defiance of the federal law.
Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said Idaho would allow the sale of “junk insurance,” and he asserted that the state was moving “back to yesteryear, when insurers could beat the stuffing out of people with pre-existing conditions.”
The plan presents Mr. Azar with a choice that he could face frequently in his new job: whether to try to shore up the health law or to “let Obamacare fail,” as President Trump has threatened to do. His decisions could have significant consequences both for consumers and for Republicans in the midterm elections.
Mr. Azar said he had seen news reports of Idaho’s plan, but did not know the details because the state had not asked the federal government for a waiver of requirements in the Affordable Care Act.
But Mr. Wyden said that “Idaho is breaking a federal law” and was not seeking permission from the federal government.
At a separate hearing on Thursday before the House Energy and Commerce Committee, Representative Frank Pallone Jr., Democrat of New Jersey, said the Trump administration was “sitting on the sidelines while Idaho clearly circumvents the law.”
Mr. Azar described Idaho’s plan as “a cry for help” by a state seeking more affordable coverage options for its residents. He said the Idaho program would be subject to “searching review for compliance” with federal law.
“We have a duty to enforce the law as Congress has written it,” Mr. Azar said. But he added that the federal government must proceed with “a great deal of deliberation and caution and care” in assessing the Idaho plan.
At three congressional hearings in 36 hours this week, Mr. Azar also explained his portion of Mr. Trump’s budget, which seeks $1.1 trillion for the Department of Health and Human Services in the fiscal year that starts on Oct. 1.
Senator Michael D. Crapo, Republican of Idaho, defended his state’s plan to allow the sale of noncompliant coverage. Idaho’s goal, he said, is “to protect and expand the opportunities and access people have to insurance of their choice.”
Idaho residents will still be able to obtain coverage that complies with the Affordable Care Act on the state’s health insurance exchange, Mr. Crapo said. But Idaho will allow other options, outside the exchange.
The Republican governor of Idaho, C. L. Otter, known as Butch, issued an executive order last month to combat what he called “the overreaching, intrusive nature of Obamacare.” And on Jan. 24, the state Insurance Department issued guidelines for the sale of insurance policies that do not meet coverage requirements of the Affordable Care Act.
Idaho’s new “state-based health benefit plans” will have to carry a disclaimer: “The policy is not fully compliant with federal health insurance requirements.”
Insurers in Idaho could, in some cases, charge different rates based on a person’s health status or claims experience. In addition, insurers would not have to comply with provisions of the federal law limiting out-of-pocket costs, and they could impose caps on the dollar amount of benefits available to consumers.
Dean L. Cameron, the director of the Idaho Department of Insurance, said in an interview on Thursday that insurers could start selling the new state-based health plans as early as April.
“We are trying to salvage the market,” Mr. Cameron said. “The young and healthy people of all ages have left the market. We are trying to bring them back. Our goal is to help Idaho families.”
Blue Cross of Idaho said this week that it would offer five such plans. “The Affordable Care Act marketplace has become unaffordable for Idaho’s middle-class uninsured,” the company said, and it told consumers that the new plans could cost “up to 50 percent less” than plans that comply with the federal law.
Mr. Azar, a former top executive at Eli Lilly and Company, the drug maker, deftly fielded questions about prescription drugs. He said the president’s budget included “a suite of proposals” that would save Medicare beneficiaries money — for example, by capping their out-of-pocket costs for many prescription drugs and by giving them the benefit of price concessions negotiated by insurers and prescription drug plans.
Democrats were not impressed.
“None of the policies go after the pharmaceutical industry, your former employer,” said Senator Sherrod Brown, Democrat of Ohio.
Mr. Azar said Medicaid, the program for more than 70 million low-income people, was full of perverse incentives that tended to drive up drug costs. Under federal law, Medicaid is generally entitled to the best price given to other purchasers of brand-name prescription drugs, with a mandatory discount of at least 23 percent off the list price.
Mr. Azar agreed with Senator Bill Cassidy, Republican of Louisiana, who said these discounts led drug makers to raise prices for other customers.
“If we underpay in Medicaid, it will increase costs elsewhere,” Mr. Azar said.
Members of both parties expressed concern about Mr. Trump’s proposal to cut $48 billion over 10 years from projected federal payments to teaching hospitals for graduate medical education.
Mr. Azar said the administration wanted to direct funds to geographic areas and medical specialties with the greatest need for more doctors.
But Senator Bill Nelson, Democrat of Florida, said the proposed cut would “severely hurt a state like ours, a growth state, that desperately needs residency programs to keep our doctors.”
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