Texas Senator Ted Cruz has floated an idea for an amendment to the Senate’s health care repeal and Medicaid cut bill that is under consideration. His amendment would set up two parallel health insurance markets – one with popular consumer protections from the Affordable Care Act and one without them. The idea would result in people with pre-existing conditions paying much more for health insurance, if they can afford it at all.
This is a terrible idea. Here’s why:
Insurers would offer bare bones policies that would have lower premiums but with skimpy coverage that could include much higher deductibles, lifetime limits, and no coverage for important care like mental health, substance use disorder, maternity, and prescription drugs. Insurers would be allowed to deny coverage in these skimpy plans to people with pre-existing conditions. These plans would attract younger and healthier people, creating a way for insurers to cherry pick the most profitable consumers.
Insurers would also continue to offer full coverage in the Health Insurance Marketplace to consumers as well, and plans in the Marketplace would have essential benefits, no lifetime limits, and subsidies for people with low and modest incomes. In these comprehensive plans, insurers could not deny coverage or charge people more due to pre-existing conditions. This market would become a de facto high risk pool, as consumers with health care needs gravitate there to access comprehensive coverage or when denied in the other market. Premiums would skyrocket, as always happens with high risk pools.
Consumers who qualify for subsidies would get some help with premiums, but under the Senate bill, the Marketplace subsidies would be far less generous than today. Individuals earning $42,000 a year would make too much to get any help, if unlucky enough to have a health condition that locks them out of the cheaper plans, would have to pay full freight for very expensive plans. Also under the Senate bill, as people age premiums would be higher and subsidies are less generous than under current law, making coverage unaffordable for many people over age 50.
Actuaries and experts are concerned that segmenting the insurance markets by risk will make them less stable. Politicians and consumers are rightly concerned about access and affordability of insurance. As a Senate GOP aide told The Hill, “Nobody wants to go home and say to a 45-year-old steelworker with diabetes that you should have to pay a lot more for your health insurance.”
The amendment idea floated by Senator Cruz doesn’t represent a compromise or a pathway forward on health reform. It will once again make health insurance unaffordable to many people with pre-existing conditions, and it will expose people with skimpy benefit plans to potentially catastrophic out-of-pocket costs in the event of a serious accident or illness.
The Senate’s current health care bill cannot be fixed, certainly not by rolling back protections for people with pre-existing conditions. The Senate should go back to the drawing board and work on changes that won’t result in millions of Americans losing their health coverage and costs going up for millions more.