| https://www.vox.com/policy-and-poli...alth-care-bill-insurance-regulations-ted-cruz Ted Cruz has a big idea that just might unlock a Senate health care deal An amendment is under consideration that maybe, just maybe, could unlock the whole Senate Republican health bill. It might knock over the dominoes necessary for a deal, starting with regulations, moving to tax subsidies, and ending up with more cash for Medicaid and fewer tax cuts for the rich. It comes with big long-term risks for Americans who have high medical costs — and it could ultimately shift the burden of covering the uninsured further way from middle-class Americans who already have insurance, and more onto predominantly wealthy taxpayers. Its author? Sen. Ted Cruz of Texas. ..... Enter Cruz. Here’s how the Texas senator described his plan, in his own words, on Wednesday: If an insurance company offers at least one plan in the state that is compliant with the (Obamacare) mandates, that company can also sell any additional plan that consumers desire. What that does is it maintains the existing protections, but it gives consumers additional new options above and beyond of what they can purchase today. As a matter of politics, you could see how the idea would be a winner: Moderates can say they kept Obamacare’s insurance reforms and conservatives get to say they allowed non-Obamacare plans back on the market. As a matter of policy, it’s a much more complicated picture. The fundamental problem is sicker people would be drawn to the more robust Obamacare plans, while healthier people would gravitate toward the skimpier non-Obamacare coverage. That’s a reality that even Cruz acknowledges. Then inside the Obamacare market, as more and more sick people buy coverage there, costs for health insurers go up and so they increase premiums. It has the makings of a classic death spiral. Because only sick people remain, premiums eventually increase to astronomic levels. It turns the Obamacare exchanges into a high-risk pool. Cruz’s counter, when I asked him about this, was the Obamacare subsidies that the Senate bill is largely keeping, though it scales them down. Under Obamacare, people who receive the subsidies are partially inoculated from premium increases because they pay only a certain percentage of their income for health insurance. The Senate’s bill also includes upward of $100 billion to further subsidize people with high medical costs. “You would likely see some market segmentation” Cruz told me. “But the exchanges have very significant federal subsidies, whether under the tax credits or under the stabilization funds.” That is true. But outside experts argued that the costs to the federal government could be unsustainable. As the Obamacare markets turned into high-risk pools, premiums would increase, driving the cost of the tax subsidies higher and higher. “Keeping the ACA tax credits would, in theory, protect subsidized consumers,” Larry Levitt, senior vice president at the Kaiser Family Foundation, told me. “But the cost of those tax credits would quickly skyrocket, because healthy people would flock to non-complaint plans, which could cherry pick them with inexpensive premiums.” Cruz acknowledged that his plan would depend on taxpayer subsidization of people with high medical costs. But, he argued, it was better for the federal government to pick up the tab than requiring health plans to charge sick people and healthy people the same premiums, increasing costs for the latter. “It’s not fair to a working-class person who’s struggling to put food on the table, for the federal government to double their premiums trying to work an indirect subsidy for others who are ill. Far better to have it through direct tax revenue,” Cruz told me. So it becomes a question of the federal government’s willingness to pay that bill, indefinitely into the future. Otherwise, people with high medical costs could be stuck with a market that doesn’t function and isn’t adequately subsidized. The whole idea is dependent on an effectively unlimited federal commitment to pay the bills. |
Thoughts? It seems like a decent compromise but the big quesiton is if the gov't would provide the funds necessary to protect those who end up with high premiums.
