The health insurance industry’s largest trade group is warning that a proposed amendment to the Senate’s healthcare bill could not only destabilize the individual marketplaces, but also harm patients with pre-existing conditions.
The amendment, introduced by Sen. Ted Cruz, R-Texas, would allow insurers to sell health plans that aren’t compliant with the Affordable Care Act’s rules in any given state as long as they sell at least one ACA-compliant plan on that state’s exchange.
Cruz and the amendment’s other supporters in the Senate said the concept would allow insurers to offer a wider variety of coverage options and help lower premiums. Senate Majority Leader even reportedly went so far as to ask the Congressional Budget Office to score the proposal.
But the idea also has plenty of critics, including America’s Health Insurance Plans (AHIP).
In a document (PDF) posted on its website, the trade group said that allowing health insurance products to be governed by different rules would effectively “fracture and segment insurance markets into separate risk pools and create an un-level playing field that would lead to widespread adverse selection and unstable health insurance markets.”
The trade group pointed out that part of the exchanges’ current woes stemmed from the Obama administration’s transitional policy, which allowed individuals to renew their non-ACA-compliant plans. In states that opted to adopt this policy, actuaries estimated that exchange market premiums were an average of 10% higher.
Cruz’s amendment, which would essentially make that transitional policy permanent, “would create even greater instability,” AHIP said.
The fact that the proposal would require insurers to also offer an ACA-compliant plan, the group said, is not enough to protect consumers with pre-existing conditions or higher-than-average healthcare costs. The ACA’s consumer protection provisions, such as guaranteed issue and community rating, AHIP notes, “only work if there is broad participation to assure stable markets and affordable premiums,” which wouldn’t be the case under Cruz’s proposal.
In fact, a newly released analysis from the Kaiser Family Foundation estimated that the amendment could result in 1.5 million people with pre-existing conditions facing higher premiums.
Finally, it’s simply not practical to maintain a single risk pool if all health plans don’t have to provide coverage for the same benefits, AHIP stated, adding that the Cruz amendment also would make programs like risk adjustment “unworkable.”