Cruz's 'consumer freedom' proposal could plunge health market into death spiral


Considering that the bill was designed by a handful of men in closed-door discussions (with no public input), it should come as no surprise that the effect it would have on over 50 percent of the population wasn't a top concern.

Senate Minority Leader Chuck Schumer (D-N.Y.) blasted the revised Obamacare repeal and replacement bill at a news conference on Thursday. Another Republican senator, Mike Rounds of South Dakota, is trying to undo the damage Cruz's plan would do by creating some kind of "ratio" between the costs of the expensive insurance and the cheap insurance.

A fixed-indemnity insurance plan is a type of supplemental health plan that gives you a fixed cash benefit payout in case you experience specific illnesses or injuries covered by your policy. This probably would, as intended, lower premiums for healthy people who buy the cheap policies. Even the insurance companies are saying this is a awful idea that will lead to higher premiums. That has made coverage more robust, but it's also raised premiums for relatively healthy people. The Senate bill offers one particularly intriguing element: allowing Americans to pay health insurance premiums using pre-tax income via health savings accounts.

Although the Cruz/Lee amendment is dubbed the "consumer freedom option", Pollitz said the title is misleading. Insurers could offer plans with reduced benefits - no maternity coverage, for example. Premiums for those who need comprehensive coverage would shoot up.

The criticism of Cruz's provision was lodged in a rare joint statement by America's Health Care Plans and the BlueCross BlueShield Association.

With 52 members in the Senate, Republicans can only lose two members and still pass the bill under budget reconciliation rules that prevent filibustering by Democrats. To insurers, they might be basically uninsurable outside a high-risk pool. The tribes say that with their proposal to build a casino in East Windsor to intercept Springfield gambling traffic, they want to save jobs for CT and revenue for state government. As many as 20 million Americans get coverage this way, about half through subsidized markets like, created under former President Barack Obama. Insurance expert Karen Pollitz, now with the nonpartisan Kaiser Family Foundation, said several states tried a similar approach in the past, and it didn't go well.

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That might not sound like much, but it has the potential to drive down premiums and re-shape individual health insurance markets across the country, which right now are collapsing under the weight of Obamacare regulations and rising premiums.

Cruz says that doesn't have to happen.

"The overall bill adds $70 billion to the stability fund", he said. But at least the pools provided a way for people with expensive or chronic health problems to have some form of health coverage. But critics say that would depend on how much money is provided.

So with that as a backdrop, the negative reaction to Cruz's proposal from the health insurance industry reflects the experience they had before Obamacare.

"The "Consumer Freedom Option" is unworkable as it would undermine pre-existing condition protections, increase premiums and destabilize the market", Blue Cross Blue Shield President Scott Serota wrote the senators in a letter released Wednesday.

"It's really perplexing, especially from the insurance companies, because all they have to do is dust off how they did business before ObamaCare", Price responded.

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