Note: This story was updated 4 p.m. Oct. 3 to add comments from the Centers for Medicare and Medicaid Services regarding the waiver approval process.

Oklahoma is blaming the Trump administration for failing to approve an expedited plan that was projected to lower health insurance premiums and entice thousands of uninsured Oklahomans to sign up for coverage.

In a letter sent today to U.S. Treasury Secretary Steven Mnuchin and U.S. Health and Human Services Secretary Tom Price (who resigned late Friday for unrelated reasons involving the use of charter aircraft), Oklahoma Secretary of Health and Human Services Terry Cline said the state is formally withdrawing its request for a waiver to begin a reinsurance program through the Affordable Care Act because federal officials didn’t fulfill a promise to approve it on time.

The program would essentially offer government-backed insurance to health insurance companies to cover their costs when they face unexpectedly high claims on the Obamacare exchange, which now covers 124,000 Oklahomans.

A state-commissioned report projected the reinsurance program could reduce premiums on the exchange by up to 35 percent. That could entice an extra 5,000 to 15,000 Oklahomans to enroll in the marketplace and get health care they otherwise likely would go without. Many of them qualify for few or no tax-credit premium subsidies because their incomes are too high.

Oklahoma in August requested a decision on the waiver by Sept. 29 in order for it to take effect for the 2018 plan year.

Cline wrote in the letter that there was a preliminary agreed-upon approval package with the federal government that was circulating last week. And he wrote there was a “federal department promise” that the waiver would be approved Sept. 25.

But he wrote that the federal government, “with no reason for the delay,” sent notice Monday that there would be no approval at that time. Since Blue Cross Blue Shield of Oklahoma – the only insurer providing coverage in Oklahoma on the federal exchange for individual plans –  needed to a meet rate-filing deadline, Cline wrote that it is no longer possible for it to take effect for next year.

He continued that “the lack of timely waiver approval will prevent thousands of Oklahomans from realizing the benefits of significantly lower insurance premiums in 2018.”

The waiver request was the state’s primary strategy in stabilizing the individual marketplace, which has seen average monthly premiums rise from $277 in 2015 to $571 this year.

The reinsurance program would’ve created a pool of money to reimburse insurers for high costs on the exchange.

In the state’s waiver application, it was requesting $309 million in pass-through funding from the federal government that would go to the reinsurance pool. The state’s $16 million share of the cost would’ve been funded by a $0.76 fee – down from the original projection of up to $5 – on every health plan offered in the state.

But the federal government, according to the application, wouldn’t see higher costs since its spending would recouped through savings. That’s because the federal government would have to pay out less in subsidies as premiums decrease.

In a letter to states sent in March, Price encouraged states to seek the waiver as a way to stabilize the marketplaces.  Since then a number of states have applied for the waivers and the federal government has approved requests in Alaska and Minnesota.

But in recent days, the latest congressional plan to repeal and replace the federal health care law has failed. Democrats have accused President Donald Trump of trying to sabotage the federal exchange – and force Democrats to join Republicans in creating a new law.

This includes moves to cut funding for enrollment-outreach efforts.

Cline didn’t assign a motive in his letter for the administration not fulfilling its promise to approve the waiver on time. And he said the state will continue to seek waivers for future years that could give it flexibility to stabilize the marketplace.

But the state’s waiver application shows that the trend of higher premiums and fewer Oklahomans receiving coverage will continue for the time being.

“If the (reinsurance program) is not implemented, premiums will continue to rise, which will in turn reduce enrollment as more individuals are priced out of the market,” Oklahoma’s application stated. “Increased premiums also will likely promote adverse selection, as the individuals who continue to purchase increasingly expensive coverage will likely be those who utilize a higher number of healthcare services.”

After Oklahoma notified the federal government of its withdrawal of the waiver, a spokesperson with the Centers for Medicare and Medicaid Services disputed the state’s claim that there was a promise to approve the package by the end of September.

“Oklahoma’s 1332 State Innovation Waiver was completed on August 24, and CMS received substantive comments through the end of the public comment period on September 23, that needed to be addressed,” the spokesperson said in a statement. “At no time was an approval package or an approval date ever agreed upon.”

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