It All Comes Down to Ted Cruz

Ebony Scott
July 17, 2017

After its initial failure to launch-or, more accurately, failure to get enough support for a vote-a revised version of the Senate health care bill is back in the spotlight and Majority Leader Mitch McConnell is eager to push it through.

But the most important amendment might be the proposal from Sen. Ted Cruz, R-Texas, which would allow health insurers to sell rational, health-rated plans that do not meet Obamacare requirements, if they also offered a plan that meets all other Obamacare requirements including covering all those with serious pre-existing medical conditions.

People with preexisting conditions - even if they don't now require medical care - may also end up on these plans because cheaper off-exchange plans would likely bar them from signing up. The rules sparked anger that people were being forced to buy coverage for issues they didn't have - maternity care for guys is a textbook example.

That might not sound like much, but it has the potential to drive down premiums and re-shape individual health insurance markets across the country, which right now are collapsing under the weight of Obamacare regulations and rising premiums.

Here's the big problem: As more sick people start signing up for Plan B, insurers will raise its premiums to make up for the fact that these folks need more expensive care.

It's created to drastically weaken America's health security - and it's therefore a woeful alternative to Obamacare.

If the insurance market were to segment, and there were different sets of rules and standards for the sick versus the healthy, costs would nearly certainly skyrocket for the high risk pool created by the Cruz amendment. Reduce costs, reduce taxes, take away the "individual mandate", but still ensure people that want healthcare have the ability to purchase it. This of course is what's happening under Obamacare. "If they are not heavily subsidized, they run the risk of becoming unsustainable and going into a death spiral".

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Under the bill, health savings accounts could be used to pay premiums with pre-tax money. This is similar to the "risk-adjustment" transfers that now occur under Obamacare, but doing it between regulated and unregulated plans would be harder. They also say the plan would leave consumers with fewer insurance options, so "millions of more individuals will become uninsured".

That brings us to the present day. Healthy people's premiums help pay for the care for sick people. As premiums rose, younger and healthier people, who didn't think coverage was an absolute necessity, simply didn't buy insurance. Republicans have cherry-picked horror stories of skyrocketing premiums, and it is true that 2017 saw premiums rise as part of this price correction. Members in both parties have backed these proposals, which guarantee continued funding for federal insurance subsidies, reimburse insurers for the care of high-cost patients and provide more options to families living in barren insurance markets.

Pollitz said she doesn't know how to devise a plan that links the rates for plans that don't cover the same benefits. But it was only funded with a one-time appropriation of $5 billion, and enrollment was capped at 115,000 before the exchanges opened because the program was running out of money. But they would likely try to raise the premiums significantly, and the subsidization of those costs would fall on the federal government.

The whole thing would function, if it functions at all, like a series of state-based, federally funded high-risk-pools.

So what counts as a preexisting condition that could get you denied coverage under the new plan?

Two of the insurance industry's most powerful organizations say a crucial provision in the Senate Republican health care bill allowing the sale of bare-bones policies is "unworkable in any form", delivering a blow to party leaders' efforts to win support for their legislation. Why contaminate a functioning insurance market for 300 million people, to give coverage to 1.5 million?

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