Sen. Ted Cruz (R-Texas) emphatically told fellow Republicans Thursday that his amendment to the Senate’s Obamacare repeal legislation would not split up healthy and sick people into two different risk pools, eliminating concern that an earlier version of his plan would drive up costs for sick people.
But insurance experts say that’s not the case.
Cruz personally presented the amendment, which would let insurers sell skimpier health plans as long as they also sell an Obamacare-compliant plan, to senators Thursday, categorically telling them that there would be one risk pool, according to several sources in the room.
Moderate senators had been worried about a prior version of the Cruz amendment, offered with Sen. Mike Lee (R-Utah), that would have divided the market into healthy and sick people, therefore eliminating protections for people with pre-existing conditions.
While it’s true that the Cruz amendment does not repeal the Obamacare section that establishes a single risk pool, in practice it could introduce chaos into the market. The reason: There’s no practical way to regulate plans with no uniform coverage rules as a single insurance market.
“I don’t even know how you would apply a single risk pool,” said Gary Claxton, an insurance expert at the Kaiser Family Foundation, pointing out that regulators would have to wrestle with an infinite array of issues in a market with no rules. “There’s no regulator on the planet who has enough time to make sure all those assumptions make sense.”
Insurers are bewildered by the suggestion that the Cruz amendment would allow the insurance market to operate as a single risk pool.
“It seems hard to understand and doesn’t make a lot of sense,” said Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts.
Lee — often a Cruz ally — is withholding support for the Obamacare bill in part because the amendment has been changed. A Lee spokesman said a prior version of the amendment would have repealed Obamacare’s requirement to have one risk pool.
“The new Senate health care bill is substantially different from the version released last month, and it is unclear to me whether it has improved,” Lee said in a statement, adding that he’ll need time to study it.
Moderate senators leaving the Senate meeting where the new bill was discussed said they were told that under the plan, the individual insurance market would remain a single risk pool, although they admitted to being confused about how it would actually work.
“It is a single risk pool," said Sen. Bill Cassidy of Louisiana. "But what I’m not quite sure [about] is whether or not there’s enough structure to the off-exchange plans. And also, I think there’s more details that we’re going to learn."
Some moderate Republican senators, including Mike Rounds of South Dakota, have suggested linking the risk pools in order to ensure that sick people are not charged tremendously more and to preserve their pledge not to hurt coverage for people with pre-existing conditions.
But insurance experts point out one other provision in the amendment that seemingly undercuts Cruz’s assertion that there will be no separation between people enrolled in Obamacare plans and those who purchase policies not compliant with the law: It explicitly states that there will be no risk-adjustment program for non-compliant plans. That’s a program designed to share financial risk across the whole market so that insurers that attract disproportionately sick, expensive customers don’t get pounded financially.
Both America’s Health Insurance Plans and the Blue Cross Blue Shield Association blasted the Cruz amendment before the specific language was released, arguing that it could jeopardize access to coverage for people with expensive medical bills if all the healthy customers flock to non-compliant plans.
Burgess Everett contributed to this report.