DC Deciphered

Do you believe in fate?  I’m not sure if I do, but I must admit that it’s a very strange coincidence that the GOP health care vote originally scheduled for this week has been delayed by a . . . health crisis.

Senate Majority Leader McConnell had planned to hold a procedural vote on the health care bill this week (which, for all intents and purposes would be the vote, since this vote is the real hurdle for him to clear), and he was juuust hanging onto enough votes for passage by the skin of his teeth.* But then, Saturday evening, Senator John McCain’s office put out a statement saying that the Senator would have to remain in Arizona for at least a week after having a blood clot removed from above his eye. And with that, McConnell was forced to postpone the vote.

McConnell’s Evil Genius Thwarted

This delay is highly significant because McConnell’s whole strategy for getting this bill passed relies on rushing it to a vote before his Senators have time to think better of voting for it, before the public has time to understand what’s in it, before the pressure has time to build to insurmountable levels.  The first version of the Senate bill failed because enough resistance mobilized against it, despite the condensed time table.  Heroic efforts were made by health analysts to quickly get word out to the public about what was in the bill and what the effects would be, and equally heroic efforts were made by activists to put pressure on GOP Senators.

However this time around, with version 2.0, while much of the bill is fairly well understood,** McConnell inserted a provision at the last minute (Friday) that has not gotten much attention outside of the health care hard core, is not well understood by the public (or Congress), and which even health policy experts are struggling to still fully comprehend.  This provision – the Cruz amendment – dramatically changes the overall impact the bill will have on the individual health insurance market.

McConnell’s intention was to have the Senate vote on the bill just days after announcing (even to his own members) that this amendment would be included, leaving the public & even many Senators completely befuddled about the impact of this bill.  But now, due to a twist of fate (or perhaps mere coincidence) we will all have at least an extra week to consider the Cruz amendment.  My only fear is that the media and Democrats are so busy with the (admittedly juicier by the minute) Russia story, that they won’t make good use of it.

And now if you’d like to learn about the Cruz amendment and how it will drastically remake the individual health market, please read on . . .

What is the Cruz Amendment & Why is it So Harmful?

The Cruz amendment, brain-child of Senator Ted Cruz, says that an insurer can offer “bare-bones” plans that don’t meet Obamacare’s consumer protection requirements as long as the insurer also offers at least one Obamacare-compliant plan in the market as well.  The requirements that the Cruz plans would not have to comply with are things such as being required to sell to customers with preexisting conditions, being required to charge customers the same regardless of health status, and being required to cover certain “essential health benefits” (things like maternity care, prescription drugs and emergency room visits).

So this idea might actually sound pretty reasonable at first glance.  But once you stop and examine it, you’ll see that it will likely destroy the individual health market.  That dreaded “death spiral” Republicans keep claiming (falsely) that Obamacare is in?  The Cruz amendment would actually bring it.  If this plan goes into effect, young people, healthy people, people who think they’re not going to have any major health care needs will all buy the Cruz plans (or no plan at all).  People who actually need health care or feel they’re likely to need it (maybe because they’re older) will buy the Obamacare-compliant plans.

This means the risk pool for the Obamacare-compliant plans won’t be balanced – it will be made up mainly of people with significant health care needs.  So those plans will be extraordinarily expensive.  As people stop being able to afford them, they’ll drop the insurance (these will most likely be people who are on the healthier end of the spectrum) and the plans will become even more expensive, leading prices to rise even more.  This will eventually lead even more people to have to drop out, leading to further price increases, and there’s your death spiral.  Health insurance numbers guru Charles Gaba took a stab at figuring out likely premiums (and these prices are for the cheapest – Bronze – plans, which cover less than 60% of medical expenses):

But I’m Pretty Healthy, So Why Should I Care?

And here’s the thing, people may say, “well, that’s fair, the people who use the most care, should pay more.”  But, first off, if that’s the philosophy behind this plan, then Republicans should make that argument openly and not hide behind a bunch of false defenses for their plan.  But that’s not the argument they’re making for this plan.  So let’s cross that off the list.  Besides, it’s not just people with major illnesses who will be forced to buy these extremely expensive plans (or go without insurance).  The Cruz plans can turn people down if they have preexisting conditions or charge them way more for it (and if you remember what it was like before Obamacare, a preexisting condition can be something as simple as acne or allergies).  So anyone who has a minor condition or has ever been sick in the past might not be able to get one of the inexpensive Cruz plans.

On top of that, the Cruz plans will be essentially worthless.*** Anyone who actually wants the security insurance is supposed to provide would need an Obamacare-compliant plan.  As mentioned above, there will be no requirement for the types of services these plans must cover.  There would also be no requirement as to how much of your care they must cover – they could get you off after say, $10,000 of care.  Or even $2000.  And it will be extremely complicated to figure out exactly what you are buying when you choose one of the plans.

So someone who buys a Cruz plan might think they have real insurance, until the time comes that they get sick or injured and actually need any kind of significant care.  This New York Times article does a nice job of conveying what these plans might look like, based on what many junk plans were like before Obamacare went into effect.  (And this particular excerpt also makes the point that no matter how young and healthy you think you are, you never know when you a major health crisis might strike you):

Ned Scott, 34, who lives in Tucson, said the health plan he had before the Affordable Care Act left him with $40,000 to $50,000 in unpaid medical bills after he learned he had testicular cancer when he was in his late 20s.

“I thought it would cover things,” Mr. Scott said. But once he needed it, he learned the plan limited what it paid for outpatient care to $2,000 a year, and all of his treatment, from chemotherapy to CT scans, seemed to fall in that category.

And while proponents of the Cruz amendment argue that consumers should be free to buy those bare-bones policies if that’s what they choose, many consumers buy them without understanding that’s what they’re getting.  The intricacies of health insurance contracts are very confusing, and one of the underappreciated benefits of Obamacare is how it simplified the “browsing” process with its tiered plans and across-the-board minimum standards. (See the note at the end of this post).  These advantages would be gone under the Cruz amendment.

The Deception of it All (Or Lies Within Lies Within Lies . . .)

So really what we have with the Cruz amendment is a roundabout way for the Republicans to get rid of Obamacare’s protections for people with preexisting conditions while still being able to claim they are keeping their promise to preserve those protections.  However they know full well that this plan breaks that promise.  Even Iowa Senator Chuck Grassley, who has never been considered a “moderate” in this health care debate said just last week of the Cruz amendment that “There’s a real feeling that that’s subterfuge to get around pre-existing conditions.”  Of course this was before McConnell had announced that he’d be including the provision in the bill.  We haven’t heard a peep out of Grassley on the topic since.

Additional evidence for the fact that Republicans know how terrible this provision is comes from the fact that their only method for defending it is to lie about it.   Cruz himself has been reassuring hesitant colleagues by telling them that the high premiums resulting from his amendment will be taken care of by federal subsidies.  This is nonsense though because as of right now, nearly half the people who buy insurance on the individual market don’t get subsidies and will have to pay the full premium price.

Additionally, Republicans have lowered the income cap at which people stop receiving subsidies, so under their bill, even fewer people will receive subsidies than under Obamacare.  (Under Obamacare people making up to 400% of the federal poverty level receive subsidies, the GOP bill lowers it to 350%). On top of this, the dollar amount of the subsidies that people will receive is significantly reduced under the GOP bill as compared to Obamacare. So Cruz’ defense is false on multiple levels.

Next, Cruz and other Republicans are touting some “extra funding” that will be given to states to be used to help high risk individuals pay these high premiums.  However, they fail to mention that this funding is not actually “extra” but is simply money that is being double counted from a different part of the bill.  This same pot of money is also promised to the states to help lower premiums in other ways (labeled in the bill as a “stability fund”).  Obviously the same money can’t be used twice, so this is another lie.

Finally, Cruz and his GOP allies are telling people that there will only be a single risk pool under his amendment. In other words, the healthy people who buy the bare-bones plans and the sicker people who buy the (expensive) Obamacare-compliant plans won’t be separated into two pools for pricing/risk assessment purposes, but instead they’ll all be averaged together. If true, this would keep the Obamacare-compliant plan prices from sky rocketing, because they’d be averaged out with the healthy/bare-bones plans.

But every health policy expert who has weighed in on this, along with a group of  actuaries [PDF] and health insurance companies themselves all say that it is impossible to do risk assessment that way.  They say there would be no way to make that happen.  Not to mention, simple logic tells us the “single risk pool” argument is bunk, because that would defeat the whole purpose of the Cruz amendment in the first place – to allow healthy people to buy dirt cheap insurance.  So there’s yet another lie.

So these are 3 huge whoppers that Cruz and other Republicans are using to try to sell this terrible addition to their bill. And all of these lies are designed to hide the fact that they’re breaking their promise on preexisting conditions.  They have made no honest argument in favor of the amendment.  Probably because they know there is none.

And that is likely why the insurance companies, which had up to this point been fairly quiet in the health insurance debate (reportedly not wanting to get on the bad side of the Republican Congress) finally weighed in with an unsparing letter condemning the Cruz amendment.  The letter says the amendment is:

simply unworkable in any form and would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market . . .

this provision will lead to far fewer, if any, coverage options for consumers who purchase their plan in the individual market. As a result, millions of more individuals will become uninsured.

One Last Deception For Good Measure

And, if all of the above weren’t enough, McConnell had been planning to send the bill to a vote without having the Cruz amendment scored by the CBO. (A CBO score of this amendment is unlikely to be good for Republicans.  At all).  Republicans had conveniently “forgotten” to send the amendment to the CBO with the rest of the bill, and last week McConnell said there wouldn’t be time to wait for a score from them, which would take two to three weeks.  (And why are we rushing again?).

But because Senate rules require that the entire bill have a score of some sort,  McConnell planned to have the provision scored by the Trump administration’s HHS.  In case the implications of that aren’t clear – HHS, led by Tom Price, is a partisan agency with a pretty clear bias.  The CBO, on the other hand, is explicitly designed to be non-partisan and to do its work without bias (and since Republicans are so fond of labeling any facts that are bad for them “biased” or “fake” I’ll just take a moment to point out that Tom Price himself appointed the current head of the CBO, so if he were inclined to be biased, it would more likely be in their favor). In any case, now that the vote is delayed, McConnell no longer has this excuse for not waiting for a CBO score.  But it won’t be a big surprise if he still manages to find a way around it.

So, Democrats have just been handed at least an extra week to make this case against the Cruz amendment, and against the GOP bill more generally.  And it should be a blockbuster case to make. So I really hope they will use the time wisely and devote the week to getting this message out.  I also hope the media will assess their priorities and spend some real time educating the public about what exactly the Cruz amendment is and how drastically it would change the private health insurance system.  But I fear the delay in the vote simply means that the health care story will slide to the back burner in favor of Russia, Russia, Russia.  I really hope I’m wrong.  And I wish Senator McCain happy healing.

*****

Notes:

*This was assuming that all of the Senators who had not yet publicly declared themselves a “no” were going to vote yes.  We don’t actually know if that would’ve been the case, but based on there being only two declared “no” votes, McConnell at least still had a shot at the 50 “yes” votes he needed.

**To say the bill is “fairly well understood” is being generous.  Thanks to the efforts of many analysts who have assessed the bill and gotten the word out, the public does have a general idea of what’s in the bill.  However, none of the bill has gone through the typical committee process in Congress or through public hearings or gotten any input from outside experts.  So there is still a huge risk that there are elements of this bill that haven’t been understood yet even by the experts, and there are almost certainly drafting errors and unintended consequences throughout the bill that have yet to be discovered.

***The GOP basically concedes this by saying that the Cruz plans don’t meet their own bill’s continuous coverage requirement for preexisting conditions protections.