HHS Secretary Alex Azar is set to meet this week with Idaho Gov. Butch Otter and the state’s insurance director, Dean Cameron, over their recently announced plans to allow insurers to offer coverage that doesn’t follow the Affordable Care Act (ACA), while Iowa is considering a similar move through its state legislature.

Here’s how Idaho’s plan would work: Insurers that offer ACA-compliant coverage on the state’s marketplace would be allowed to market off-exchange “state-based plans” that don’t comply with the ACA’s regulations on plan design. This could mean they charge more or deny coverage based on pre-existing conditions, exclude the ACA’s essential health benefits and place lifetime or annual caps on claims.

Blue Cross of Idaho has decided to offer five of these plans. Their proposed coverage would keep the ACA’s essential benefits (with the exception of one plan which excludes maternity care) while charging more based on pre-existing conditions and including a $1 million annual limit on claims.

When asked about Idaho’s proposal, Azar had said “there’s a rule of law that we need to enforce” while also saying he wasn’t aware of the state submitting a formal waiver to HHS or CMS on its insurance plans. In a press conference on Feb. 20, he said he wanted to review the proposal before taking a position.

“Let’s see where the state of Idaho ends up, and then, I can work with the administrator of CMS,” Azar said. “I just don’t believe in premature opinions on complex, important topics or serious weighty matters. But at the right time, I’m sure we will have views.”

Cameron told the Washington Examiner that no one from HHS has given them the OK to move ahead with the proposal “but they also haven’t given us a red light.” He added that he believes offering non-ACA compliant plans is legal, as “ACA plans will be available and consumers who wish to purchase ACA plans will have that opportunity and privilege.”

At least one other state is following Idaho’s lead. In Iowa, two bills have been introduced in the state legislature which would allow the Iowa Farm Bureau (IFB) to offer non-ACA-compliant plans. The group has argued the change is necessary to make individual market coverage affordable for self-employed farmers.

"If they have a $25,000 annual premium with a very large deductible, they can no longer afford to stay on the farm,” IFB president Craig Hill told the Des Moines Register.

The plans would be offered in partnership with Wellmark, the top insurer in the state, which had exited the ACA exchanges after 2017.

This was the scenario Democrats in Congress feared after the Idaho plan was announced. Several top Democrats on House and Senate committees had asked in January for HHS and CMS to weigh in on how the proposal could be in compliance with existing law—which CMS declined to do. In a Feb. 22 letter, the same legislators reached out to Cameron asking him to explain the insurance proposal and how it may affect the state’s individual market, including whether Blue Cross of Idaho could absorb the $100 per-day, per-member penalty for offering non-ACA-compliant coverage.