Wow… the American Academy of Actuaries is cold in their policy analysis of the Cruz plan
If some plans were allowed to avoid the ACA rules altogether, then plans competing to enroll the same participants wouldn’t be competing under the same rules. Noncompliant plans would likely be structured to be attractive to low-cost enrollees, through fewer required benefits, higher costsharing, and premiums that vary by health status. Higher-cost individuals would tend to want the broader benefits and pre-existing condition protections of ACA-compliant coverage. Rather than having a single risk pool, in which costs are spread broadly, there would be in effect two risk pools—one for ACA-compliant coverage and one for noncompliant coverage. As a result, average premiums for ACA-compliant coverage could far exceed those of noncompliant coverage, thereby destabilizing the market for compliant coverage.
The instability would be exacerbated if market rules facilitate movement of people between the two pools (e.g., if people with noncompliant coverage can easily move to compliant coverage when health care needs arise).
Downpuppy
If the object is to let people shift into cheaper plans, but there’s supposed to be payments back & forth so that the people in the cheaper plans subsidize the more expensive plans, and they didn’t notice that these things are contradictory, then my brain hurts.
Yarrow
I don’t understand the accompanying illustrations. Are the people in the second circle being held at gunpoint?
Major Major Major Major
I really don’t get what Cruz’s amendment is supposed to do. Even as a super secret plan to destroy insurance for everybody but the wealthy it’s dumb. I am left with the conclusion that Cruz, while booksmart, is otherwise a complete idiot.
Also, that infographic is confusing.
catclub
The real crime of this is that those non-compliant [totally fucking useless] policies would be on the exchanges and absorbing ACA subsidy dollars.
The Insurance companies will price them to absorb all the available subsidy.
catclub
@catclub: So Ted Cruz does not want the heavy hand of regulation on the insurers, but is happy to send our money to them for useless insurance policies.
Yarrow
@Major Major Major Major: I said last night and in the previous thread that I wonder if McConnell is setting up Cruz to take a fall. Cruz amendment fails, Cruz gets blamed. It knocks Cruz down a peg or two–he doesn’t have enough influence to get his own amendment passed. McConnell would probably be happy about that. Everyone hates Cruz.
rikyrah
When the actuaries can come this cold on you…
you, officially, ain’t shyt.
talking about you, Rafael.
But her emails!!!
Infographic explained.
ACA Compliant Coverage – Only purchased by sick people. Prohibitively expensive.
ACA Non-compliant – Cheap. Only purchased by healthy people
Barney
@Yarrow: They’re celebrating being the Chosen Ones. Yay!
Putting this into terms the average Trump supporter is familiar with:
“Before him all the nations will be gathered, and he will separate them one from another, as a shepherd separates the sheep from the goats. He will set the sheep on his right hand, but the goats on the left. ”
The sheep get the kingdom of God, and the goats get, well, f**ked, Ironically, one of the ways to get into the ‘sheep’ group is to help the sick.
kindness
Why am I thinking the tanking of the individual market is a feature & not a bug?
What really scares me is the GOP law proposes those of us with Employer coverage will find employers will be able to use the skimpiest cheapest coverage in any state they exist in for all their employees through out every state they exist in. I don’t think the ramifications of that have sunk in for most people who get their coverage from their jobs yet.
West of the Cascades
I’m astounded that among the coverage of the details of the plan (and even more the “what Senators are saying what about it”) in the major news outlets, there is essentially no mention of the fact that this cobbled-together, public-for-one-day-now bill is proposed to go to a freaking vote in a week without any hearings or opportunity for the Senate to get expert opinion on it. Obviously the short/uninformed timeframe for the vote is deliberate, but it’s so monstrous and undemocratic and different than almost any other major piece of legislation affecting such a massive part of the economy — yet that aspect of what’s happening is not being reported (beyond Senator Collins saying that she objects in part because there have been no committee hearings).
jl
@Downpuppy: I think you are getting at one of the nubs of the difference of viewpoint between the free market fanatics and sane people. If we did subsidize the sick pool, is that the ‘losers’ taking from the ‘winners’ or providing meaningful insurance? And this gets to the issue of what ‘market’ and ‘product’ mean in insurance when people can slip into a high expected cost state for long periods into the future.
the unregulated free market and regulated market provide two different products. The first cannot provide insurance over most of the average person’s life cycle. What if people would like to insure over the life cycle? Well, free market fanatics say ‘too damn bad, you should have been rich enough to self-insure over your loser life cycle’. In the second view, a regulated market would provide long term insurance that would help both the currently sick losers and the currently well winners, most of whom will get sick in the future. That means more expensive insurance for the current well winners. Some current well winners will look ahead and say ‘OK, good deal.’ Other current winners will see they would be better off skipping out of the long term risk pool when they are well.
Why not let the currently well winners do that if they want? It can be argued that this would result in market failure because of the following consideration. The currently well winners will look at the current sick pool with quite a few far sighted current well winners and say, ‘hey, if something bad happens, I could afford that’. But as time goes by the pool of sick losers gets more expensive, and some of the current well winners in that sick pool get skimmed off by cherry picking by cleverly designed insurance policies. So when the currently well winners do get sick, the policies are much more expensive than they expect now (while they are still well winners), and they have a nasty surprise. They are shit out of luck when their time to become sick losers arrives.
That kind of nasty surprise is not acceptable in economic analysis of an equilibrium over time. So, it can be argued there is a market failure.
So you have two views. The first, is that whatever the unregulated market coughs up is best and if some people don’t have the policies they want, too bad, it’s all for the best. The second is that we should provide risk sharing between the currently sick losers and currently well winners so that long term insurance contracts are available, but that requires that some currently well winners have to take insurance that they think is too expensive for the while they are well. But it can be argued that there is a welfare cost to this to society since some people want long term insurance policies that will not exist on the unregulated market. Thee are willing to pay a fair price for it but no insurance company will offer a contract at that fair price.
Bot views are respectable, but reflect different social values. The big problem is that the GOP is lying big time. They are trying to give the impression that we an live in an totally unregulated free market world and also have all the goodies of the regulated world without any of the costs.
Maybe if DA agrees with me, he can fill in some numbers, Or he can say I am full of shit.
Ohio Mom
You know that when something about medical insurance is so obvious that even a former art major like me completely understands it… Clearly Cruz’s idea is beyond idiotic.
What’s worse is that anyone has to spend time explaining how insane it is.
jl
@jl: Anyway, my precious comment is a plain English version of the famous Stiglitz-Rothschild result that there is often no competitive equilibrium on insurance markets. Which is why a lot of economists who understand the theory become concerned when people talk about unregulated competitive equilibrium on insurance markets Solving All Problems. The lack of competitive equilibrium problem arises when different people have different risks, and there is asymmetric information because people have more info about their risks than insurance companies do. When insurance contract design and implementation is expensive (as it is in health care) then the sick are the ones who get really hammered. When they are relatively cheap, then the well get hammered, but that is a topic for other lines of insurance.
A lot of lines of insurance suffer from the lack of equilibrium problem, but for things like auto,property, insurance there are easier fixes. Or, like disaster insurance, rich people don’t seem to mind the oppressive big regulation of insurance markets, or far more generous government subsidies, as much. Maybe because fewer paupers have beach front property along the east cost, or something like that.
azlib
The bottom line is Republicans do not believe that health care is an essential service which should be accessible to everyone. Cruz’s amendment is just a way to get rid of regulation and let the market do its “magic”. The market “wants” to not insure sick people and without community rates and just as important without an individual mandate it will price the sick out of the market.
Amir Khalid
Ted Cruz’s plan would be stupid if he were trying to fix health insurance in America. Remember, he and his party are trying to break it.
Skippy-san
Cruz’s amendment is about this insane desire to appease the morons of “the base”. To say they did something about repealing the ACA-and saying they made premiums cheaper. That the policies are shit, is a detail they will leave out.
FlipYrWhig
@Skippy-san: Plus they get to say “It’s a choice!” They like saying that. Well, except for that one big area where they hate it.
efgoldman
@West of the Cascades:
My kid, who writes on consumer/federal issues (among other things) for a major, well-respected web site, tweeted today:
She does not get emotional about her work, and she and son in law have good employer insurance. And yet…
Another Scott
Andy Slavitt says he has some news coming up soon on the jockeying on the Senate BCRAP bill…
Cheers,
Scott.
Another Scott
@Another Scott: The tweet thread is 19 parts at the moment. Lots of good info. I hope Richard sees it. :-)
Cheers,
Scott.
Frank Wilhoit
The reason why private enterprise has to be shut out of the healthcare coverage arena is because they are too stupid to realize that risk segmentation destroys any conceivable profit-based business model. Their only hope of a sustainable business model would be universal risk pooling — and I mean really universal, as in exactly the human inventory of the country, no exceptions, no differentiation; but they cannot see it that way, because they think they would be selling “insurance”. But of course this is why there is no such thing as “health insurance” — it is an oxymoron — there could only be healthcare coverage. Only a public entity could have the right incentives to take this on — and I will go further and qualify that by saying, only a public entity in a polity where there were no nihilistic splinter parties in a position to act as a parliamentary linchpin.
Frank Wilhoit
@Amir Khalid: It’s stupid even so, because the outcome he wants depends upon interdependencies that he doesn’t understand. He wants a certain small segment to be able to buy quality healthcare with cash up front; but if he put in place what he thinks are the preconditions for that outcome, there would be no healthcare delivery system at all. So he is simply a fool and ought to be universally treated as one (not just among his everyday colleagues at his workplace).
Albert Speer, looking back on his time with Hitler, once said that charisma is a BIG problem. He was wrong. Charisma is not the problem. Credulity is the problem.
Ryan
My unedudated guess is that you don’t know a lot about this. But given this runs against Obamacare rules, how does this not violate reconciliation? To be clear, I have no clue either.
Steeplejack
@Ryan:
To whom is your comment addressed—the original poster or one of the commenters?
If you use the Reply button, it will link your comment to the one you are referencing.
Bob Hertz
Cruz himself is a slimeball, but his amendment is not all bad, and here is why.
Under the ACA, premiums for the unhealthy are subsidized by higher premiums on healthy persons in the individual market.
The person who paid $150 a month before 2013 now pays $500 a month, and their anger fuels much of the opposition to the ACA.
Under the Cruz concept, the premiums for the unhealthy are subsidized by the taxpayers in general, including well off seniors, well off and well insured corporate employees, et al. This is not a bad development.
Now we absolutely must scrap the cap, so that unhealthy persons all get subsidies,, and not just those below 350% of poverty.
The Republicans might be too dense and stingy to do this, but let’s see.