There’s a lot riding on Sen. Ted Cruz. Above, Cruz onstage at the Republican National Convention on July 20, 2016, in Cleveland, Ohio.
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The key, now, to passing the Senate health care bill is winning over the votes of at least Texas Sen. Ted Cruz and Utah Sen. Mike Lee. The key to winning over Cruz and Lee is to include Cruz’s “Consumer Freedom” amendment in the bill, which would allow insurers to sell individual market plans that don’t comply with Obamacare’s regulations so long as they also sell at least one plan in the same market that does. And the key to getting Cruz’s amendment in the bill is to ensure that it won’t scare away more votes than it gains.
The Cruz amendment, as currently proposed, would cause too many moderates to flee, since it would undermine pricing protections for those with pre-existing conditions. Because young and healthy people would opt for the cheap, skinny, noncompliant plans, the risk pools for Affordable Care Act–compliant plans would fall out of balance, and premiums could spiral out of control as only the sickest people signed up for them. Though people making up to 350 percent of the federal poverty line (about $40,000) would be insulated from those premium increases with the aid of federal subsidies, those above that line who wanted compliant plans might have to pay, say, infinity dollars in premiums. The Cruz amendment, in short, sets up a classic adverse selection problem that could price those with pre-existing conditions out of the market.
But since this amendment is what Cruz and Lee have named as their price, Senate leaders have to find a way to let them have it—but with some adjustments to ensure that it doesn’t scare off moderates, vulnerables, and really any senators concerned about sustainable insurance markets. Resolving the conundrum Cruz’s amendment presents is now a central debate among Republican senators as they round up members for a vote next week.
One option that’s gaining steam, because it sounds like it could work in the abstract, is being pushed by South Dakota Sen. Mike Rounds. Though nothing’s been put to paper yet, the idea would be to link the prices of the compliant and noncompliant plans by a ratio to prevent the ACA plans from spiraling in cost while the “Cruz plans” remain nice and cheap.
“I talked to Sen. Cruz a couple of weeks ago about it and told him I would support it as long as there are provisions built into it so long as there is a ratio, a specific ratio, between the least expensive plan and the most expensive plan that any insurance company offers,” Rounds told reporters Monday afternoon. “And if [insurers cut the price on a cheaper] pool, they have to cut the price on the most expensive pool as well.” In other words, Rounds wants to keep the sicker pools tethered to the healthier pools, so insurance companies couldn’t keep premiums low for the plans healthy people want to buy while allowing premiums to skyrocket for the Obamacare plans sick people need.