Insurer groups slam Cruz's 'Consumer Freedom Option'

Ted Cruz speaking
Sen. Ted Cruz says his "Consumer Freedom Option" will help millions of people, but insurers aren't so sure. Gage Skidmore / CC BY-SA 2.0

The health insurance industry is doubling down on its criticism of a controversial amendment to the Senate healthcare bill, calling it “simply unworkable in any form.”

In a letter released late Friday, America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) slammed a provision—dubbed the “Consumer Freedom Option”—included in the revised version of the Better Care Reconciliation Act.

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First introduced by Sen. Ted Cruz, R-Texas, the provision would allow insurers to sell bare-bones plans in the individual market that don’t comply with the Affordable Care Act’s rules alongside more comprehensive ACA-compliant plans.

AHIP has already come out against an earlier version of Cruz’s proposal, which would have put enrollees in ACA-compliant plans in a separate risk pool from those who opt for skimpier plans. The version of the Consumer Freedom Option that made it into the revised Senate bill, however, would purportedly lump all individual market enrollees into one risk pool.

Cruz said Friday that the version of his provision included in the BCRA would help “millions and millions of people” by allowing healthier people to buy low-cost coverage, thus improving the risk pool overall, The Wall Street Journal reports.

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But AHIP and the BCBSA argue that the provision “establishes a ‘single risk pool’ in name only.” They point to a new paper from the American Academy of Actuaries, which states that if some plans are allowed to avoid ACA rules, the result would be “in effect two risk pools,” which would in turn destabilize the market for compliant coverage.

In addition, while the Senate’s bill includes funding aimed at reducing the cost of covering people with pre-existing conditions, the two insurance groups argue the amount is insufficient. The revised BCRA adds $70 billion to the long-term state stability fund, bringing the total stabilization funding to $182 billion spread over 10 years.

To make the individual insurance market work, there must be a level playing field for all plans as well as effective risk adjustment, the groups conclude. The Consumer Freedom Option, they add, “does not meet these requirements and would harm consumers who are most in need of coverage.”