Last Updated April 5 at 12:25 p.m. ET

Last month, the Trump administration shot down a plan from Idaho to sell health insurance that doesn't comply with Affordable Care Act (ACA) regulations.

“If a state fails to substantially enforce the law, the Centers for Medicare & Medicaid Services (CMS) has a responsibility to enforce these provisions on behalf of the State,” wrote CMS Administrator Seema Verma in her rejection letter.

Weeks later, another state -- Iowa -- is making a similar move.

Iowa Gov. Kim Reynolds signed a bill on Monday that allows the state’s Farm Bureau to sell health plans that don’t comply with the ACA. The Farm Bureau is the state’s organization representing farmers, but membership is open to anyone. The group -- which will partner with Wellmark Blue Cross Blue Shield to create the plans -- estimates that up to 28,000 people will be eligible for the off-exchange plans. 

The law will also let small businesses band together to sell “association health plans” to their employees. Association health plans are sold through a trade organization or industry group that aren’t subject to the same regulations as health insurance companies.

Proponents of association health plans say they are a cheaper alternative for small organizations. But critics point out that they have historically taken advantage of their regulatory exemptions and offered paltry coverage and protections.

Iowa lawmakers are confident that CMS will approve of their legislation because the association health plans are not technically considered "health insurance" by federal law, and they believe the Farm Bureau plan falls under that umbrella.

In a statement, Republican state Sen. Dan Zumbach said that this bill “is completely different from the strategy Idaho tried to use to provide affordable insurance options for their citizens,” and a section of the legislation “explicitly states the rules must be consistent with the U.S. Department of Labor rules.” 

Iowa lawmakers are banking on a proposed Department of Labor rule being enacted that would make their plans more likely to be federally compliant. President Trump signed a Department of Labor rule in January that makes it easier for small employers to band together to buy association health plans and create their own. The rule is still in a 60-day comment period.

Not everyone is convinced Iowa's tactic will work. 

“If it walks like a duck and quacks like a duck, it’s a duck. This is insurance,” Susan Voss, Iowa’s former insurance commissioner, told the Des Moines Register. 

Iowa's health insurance market has had a tough time. It only has one insurer, Medica, and started the year with a 69 percent premium increase from 2017 -- the highest in the country. As a result, the state has one of the lowest enrollment numbers in its marketplace, with only around 53,000 people buying insurance there. Around the country, ACA marketplaces have struggled to attract young and healthy people, and as a result, insurers have abandoned the marketplace, citing high costs. That has led premiums to rise.

Health policy experts, however, say this law will only exacerbate those problems.

According to Peter Damiano, director of the University of Iowa's Center for Health Policy and Research, it will further destabilize the market because more people will buy insurance elsewhere. 

“This isn’t going to help things. My question is rather how much it’s going to hurt the marketplace,” he says.

If Trump's association health plan rules are enacted, it could lead to 3.2 million people leaving the individual marketplace nationwide, according to health care consulting firm Avalere Health.

This debate follows a year of Congressional Republicans repeatedly trying and failing to repeal the ACA, President Obama's signature legislation. They were, however, able to get the votes to eliminate the ACA's requirement that people have health insurance or face a tax penalty. That was passed as part of the federal tax overhaul in December.