The Trump administration said Thursday that states could bypass major requirements of the Affordable Care Act by using federal funds for a wide range of health insurance programs that do not comply with the law.
Federal officials encouraged states to seek waivers from provisions of the law that specify who is eligible for premium subsidies, how much they get and what medical benefits they receive.
It was “a mistake to federalize so much of health care policy under the Affordable Care Act,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, told state officials at a conference in Washington.
The new policy outlined by the administration on Thursday upends a premise of the Affordable Care Act: that federal subsidies can be used only for insurance that meets federal standards and is purchased through public marketplaces, also known as insurance exchanges.
Under the new policy, states could use federal subsidies to help people pay for employer-sponsored insurance. Consumers could combine federal funds with employer contributions to buy other types of insurance.
Under the Affordable Care Act, premium tax credits are available to people with incomes up to four times the poverty level, roughly $83,000 a year for a family of three. With a waiver, states could provide assistance to higher-income families.
The Trump administration laid out templates for state programs — waiver concepts — that could significantly depart from the model enacted by Congress in 2010.
Alex M. Azar II, the secretary of health and human services, said states could use the suggestions to “create more choices and greater flexibility in their health insurance markets, helping to bring down costs and expand access to care.”
Democrats assailed the initiative as an audacious effort to undermine the Affordable Care Act. And they said the administration was ignoring the midterm election success of Democrats who had promised to defend health care that they said was threatened by President Trump and Republicans in Congress.
“The American people just delivered an overwhelming verdict against Republicans’ cruel assault on families’ health care,” said the House Democratic leader, Nancy Pelosi of California. “But instead of heeding the will of the people or the requirements of the law, the Trump administration is still cynically working to make health insurance more expensive and to leave more Americans without dependable coverage.”
Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said the administration was creating a fast lane for swift approval of “junk insurance.”
The Affordable Care Act prohibits insurers from denying coverage or charging higher premiums to people with pre-existing medical conditions. At campaign rallies this fall, Mr. Trump repeatedly promised: “We will always protect Americans with pre-existing conditions. Always.”
Ms. Verma said Thursday that “the A.C.A.’s pre-existing condition protections cannot be waived.”
But states could use federal funds to subsidize short-term plans and “association health plans,” in which employers band together to provide coverage for employees. Such plans are free to limit or omit coverage of benefits required by the Affordable Care Act, such as mental health care, emergency services and prescription drugs.
A provision of the Affordable Care Act allows waivers for innovations in state health policy. The federal law stipulates that state programs must provide coverage that is “at least as comprehensive” as that available under the Affordable Care Act and must cover “at least a comparable number” of people.
Two powerful House Democrats said the new guidance issued by the Trump administration was illegal because it did not meet the standards for waivers set forth in the Affordable Care Act.
“It is contrary to the plain language of the statute, and it appears to be part of the administration’s ideologically motivated efforts to sabotage the Affordable Care Act,” said a letter sent to Mr. Azar by Representatives Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts.
In issuing the guidance, they said, Mr. Azar also violated the Administrative Procedure Act, which generally requires agencies to provide an opportunity for public comment before adopting new rules.
Republican governors have been pleading with federal officials to give states more authority to regulate health insurance.
Paul Edwards, a deputy chief of staff to Gov. Gary Herbert of Utah, a Republican, said, “Utah welcomes all efforts that give us maximum flexibility to structure our health care programs to the unique needs of our citizens.” State officials “will look closely at how these new rules could benefit Utahns,” he said.
Brenna Smith, a spokeswoman for Gov. Kim Reynolds of Iowa, a Republican, said the governor “has a proven track record of expanding health care options for Iowans and is eager to see the new opportunities this proposal might open up.”
Iowa tried last year to get a waiver under Obama-era guidance, seeking essentially to opt out of the Affordable Care Act marketplace by offering customers a single plan with lower premiums and a high deductible.
Ms. Reynolds ultimately withdrew the request in frustration, saying at the time that “Obamacare’s waiver rules are as inflexible as the law itself.”
One option for states is to take federal funds and put the money into accounts that consumers could use to pay insurance premiums or medical expenses.
Likewise, Ms. Verma said: “States can develop a new state premium subsidy structure and decide how premium subsidies should be targeted. States can set the rules for what type of health plan is eligible for state premium subsidies.”
She was speaking Thursday at a conference of the American Legislative Exchange Council, a conservative group that promotes limited government and drafts model legislation.