There’s no sugar-coating it: The most recent version of the Republican health care bill (now featuring the Cruz Amendment) is the deadliest yet, and it’s expected to come to a vote very soon. It’s time to get very serious about stopping this bill before it kills. ( #KillTheBill )
The bill’s amendment by Ted Cruz (R, Texas) creates a pathway for “junk” insurance to be marketed in all 50 states and the District of Columbia. There would be almost no consumer protections associated with these plans, which would likely be much worse than the Swiss-cheese policies available to us prior to Obamacare. To sell these "Cruz" policies, insurers would also have to sell policies complying either with state or federal standards, depending on whether the state has opted out of federal Obamacare protections under a Section 1332 waiver.
The problem with Cruz policies, besides their being a waste of money, is that they would destabilize insurance markets and make real insurance unavailable for those whose lives depend on it. Because these policies would be available literally everywhere, they would destroy markets literally everywhere. They would have:
No preexisting conditions protections
No required health benefits
No out of pocket spending limits
No protections against health care discrimination
No coverage requirements for preventive medicine or wellness programs
No prohibition of excessive waiting periods before coverage begins
No limits on how much profit the insurer can take
NO TAX CREDITS
No pass-through funding for your state (tax credits of yours that they would take and use)
No “creditable coverage”
There are so many ways a Cruz plan could fail the consumer, as there’s no limit to the fine print and coverage holes an insurer could cram into a policy. We can expect it to offer very thin coverage for catastrophic medical expenses, for instance providing only 3 cancer treatments or 2 days of hospitalization. However, the real horror of the Cruz amendment would be the numerous exit doors it would give insurers who don't want to pay expensive claims. A Cruz plan would not provide "creditable coverage," meaning that a person wouldn't get "credit" for having insurance coverage. Therefore any illness under a Cruz plan would automatically become a preexisting condition, and it would determine what would happen after the policy's expiration. The insurance company, at its sole discretion, might choose one of three options: (1) Deny further coverage (most likely). (2) Re-issue the policy, except with an exclusion for the preexisting condition. Or (3) re-issue the policy, except with a surcharge for treatment of the preexisting condition that would resemble treatment cost.
The consumer would then have three choices: (1) Continue the Cruz policy under the new conditions, if given that option. (2) Go without coverage. Or (3) buy a “real” (or “qualified” or "creditable") plan that meets state or federal guidelines. Buying a qualified plan would be difficult for two reasons. First, lawmakers have created a 6 month waiting period from the date of application to the commencement of coverage, as a disincentive for letting coverage lapse. In practice this waiting period could be as long as a year because of misalignment with open enrollment periods and plan years. People with serious medical conditions could be particularly vulnerable during this 6-12 month waiting period without insurance. Second, a qualified plan would be quite expensive -- unaffordable for most.
The high cost of qualified plans would relate to the "death spiral" dynamic about which we've heard so much. Sick people would be the primary consumers of these plans, either because they wouldn't qualify for Cruz plans, or because they would need real coverage that the Cruz plans wouldn’t provide. And thus “real” insurance plans would become “high risk pools.” As the pools got “sicker and sicker,” premiums would climb, forcing more healthy people out of the pool. Eventually, only the sickest people would remain in the pool, and premiums would shoot potentially as high as the most expensive treatment costs (e.g. $150,000 per year, for cancer). For this reason, the Cruz Amendment is strongly opposed by America's Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association.
This “death spiral” dynamic can be prevented or softened with infusion of funding to cover excess medical costs, but that takes a lot of funding. Republicans are only appropriating $10 billion per year. Larry Levitt, Senior Vice President of the nonpartisan Kaiser Family Foundation, tells us, “Even under pretty conservative estimates, a minimally adequate high-risk pool could cost $25 billion per year nationwide.” Whether because of outrageous premiums or outrageous uninsured medical expenses, people would go bankrupt, with no access to medical care. Remember, they would not even have access to Cruz policies because of preexisting conditions. And in most states simply being penniless doesn't qualify a person for Medicaid.
Perhaps the cruelest aspect of this bill is that it would remove a rather extreme “consumer choice” option: relocating to states with better insurance plans. Many people with very serious illnesses would need to do this or face bankruptcy and loss of medical care. Unfortunately the Cruz Amendment make all states equally bad, so there would be no place to move.
Each version of the RepubliCare bill has gotten incrementally worse. The current legislation would reap widespread destruction on America's health insurance markets. Nobody would be left with insurance that is both affordable and good.
(July 14, 2017, 8:10 AM. Edited July 17, 2017 for a general audience.)