“The ‘Consumer Freedom Amendment’ Sen. Ted Cruz has offered to the Senate healthcare bill would make access to healthcare more secure for patients who develop expensive conditions.”
WASHINGTON, D.C. – Michael F. Cannon, director of health policy studies for the Cato institute, recently wrote an op-ed for The Hill outlining the need to include U.S. Sen. Ted Cruz’s (R-Texas) Consumer Freedom Amendment currently under consideration in the Senate’s Better Health Care Act legislation, citing it would “make access to healthcare more secure for patients who develop expensive conditions” and “would instantly stabilize the individual market.”
Read the op-ed in its entirety here. Excerpts of the op-ed are below:
How Cruz’s health insurance plan makes coverage more secure
The Hill
Michael F. Cannon
July 12, 2017
The “Consumer Freedom Amendment” Sen. Ted Cruz (R-Texas) has offered to the Senate healthcare bill would make access to healthcare more secure for patients who develop expensive conditions. Critics of the amendment fail to understand how health insurance markets work.
The Cruz amendment would allow individuals to opt out of ObamaCare’s costly health-insurance regulations — but only if insurers simultaneously offered ObamaCare-compliant plans to all comers, including patients with preexisting conditions.
ObamaCare’s preexisting-conditions provisions are no more than government price controls. These “community rating” price controls force insurers to charge all enrollees of a given age the same premium, regardless of health status. But forcing insurers to charge healthy people more, and sick people less, than they cost to cover creates more problems than it solves.
Thousands of years of experience have shown government price controls only make matters worse. As former Clinton and Obama economic advisor Larry Summers warns, “price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time.” ObamaCare’s price controls are no different. They are increasing premiums, reducing choice, making coverage worse for the sick, and threatening to make health insurance disappear entirely.
ObamaCare’s price controls injected adverse selection into the individual market and are therefore a driving force behind the doubling of individual-market premiums nationwide since 2013. Average premiums have increased 110 percent in Iowa and 169 percent in West Virginia.
ObamaCare’s price controls are also reducing choice by driving insurers from the market. The number of insurers participating in the 38 federally run Exchanges has fallen 50 percent since 2016.
In dozens of counties, community rating is threatening to leave sick patients with no coverage at all. This supposed consumer protection has driven every insurer from the market, leaving sick patients with no assistance with their medical bills.
The Cruz amendment would instantly stabilize the individual market the only way anyone can: by freeing markets from ObamaCare’s price controls and other regulations and letting insurers charge premiums that correspond to risk.
Absent ObamaCare’s health-insurance regulations, premiums would fall for the vast majority of Exchange enrollees by an estimated 45-68 percent. It would allow insurers to reintroduce innovative products, which ObamaCare effectively outlawed, that would reduce premiums a further 80 percent(!). Consumers could purchase long-term, guaranteed-renewable coverage that protects them from premium spikes when they fall ill, provides coverage more comprehensive than ObamaCare, and is more secure than employer coverage. Risk-based premiums stabilize insurance markets and enable these quality improvements. They are consumer protections.
Capito and Grassley may worry the government won’t provide insurers sufficient funding to make it all work. But consider: Republican lawmakers, the health-insurance lobby, and tens of millions of voters would all be invested in making it work — and Democrats almost never say no to more taxpayer dollars for healthcare. There are even ways of boosting subsidies for such plans without increasing total spending under the Senate bill.