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Cruz Pitches GOP Leaders to Allow Cheap Insurance in Health Bill

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(Bloomberg) — Senate Republican leaders are considering a proposal by Sen. Ted Cruz that would allow insurers to sell cheaper, less robust plans as long as they also sell policies that meet coverage standards imposed by the Affordable Care Act.

The Texan’s idea is aimed at breaking the health care logjam and winning conservative holdouts — but the proposal faces opposition from the moderate wing, underscoring the delicate balance facing party leaders trying to secure the votes for a bill to unwind the Affordable Care Act.

Related: ACA Taxes Aren’t Necessarily Going Away: GOP Senators)

Third-ranking Republican Sen. John Thune of South Dakota kept the door open Thursday to adding Cruz’s proposal to the Senate’s Better Care Reconciliation Act bill, saying that “there’s some value” to the policy when it comes to “giving people more options and more freedom to get the policy that they want.”

“Obviously, it has to be structured in a way that ensures that the pools aren’t adversely affected,” he said. “There was some discussion yesterday about ways in which you could incorporate that.”

Under Discussion

Sen. John Barrasso of Wyoming, a physician and member of GOP leadership, also said the Cruz proposal is under discussion, but wouldn’t say if it’ll be adopted.

The idea seeks to satisfy Cruz’s overarching goal in a health care bill: to lower premiums. He and other conservatives argue that the strict insurance rules under Affordable Care Act, aimed at protecting sick people, have driven up costs for young and healthy people who they believe should have the option of buying relative inexpensive plans — even if they would cover fewer medical services.

But critics worry the idea would lead to skyrocketing costs for sicker people and those with preexisting conditions by steering healthier people into a separate pool. And the proposal isn’t going over well with moderate Republicans, who worry it would effectively gut rules designed to protect patients.

“It would lead to adverse selection in the marketplace, and it would vitiate the important consumer protection of having a prohibition against annual and lifetime caps,” Sen. Susan Collins of Maine said in an interview.

Pre-Existing Conditions

Sen. Rob Portman of Ohio expressed some hesitation with Cruz’s idea, saying it’s important to him that pre-existing conditions are protected. He said the proposal is still being fleshed out.

Cruz has been meeting with Senate Majority Leader Mitch McConnell of Kentucky, as well as Republicans like Bill Cassidy of Louisiana and Portman, to discuss the idea. Cruz is so intent on lowering premiums, said a person familiar with his thinking, that he’d be willing to compromise in other areas if he’s convinced the bill will would do that.

The proposal by Cruz — an obstructionist during the Barack Obama presidency and 2016 presidential candidate who has tried to reinvent himself as a deal-maker under GOP rule — has the support of House Freedom Caucus Chairman Mark Meadows of North Carolina and the deep-pocketed conservative group Club For Growth. A spokeswoman for the conservative Freedom Caucus indicated that the group may be willing to consider reducing the tax cuts in the bill as part of such a deal.

Republican Sen. Pat Toomey of Pennsylvania said the Cruz idea “makes lot of sense.”

“I think there’s a lot of appeal to that idea. Anybody that likes Obamacare so much — they’d have their Obamacare plan. And then they would also have the freedom to buy anything they like,” Toomey said.

Sen. Mike Rounds of South Dakota, who previously worked for an independent insurance agency, said Cruz’s proposal has potential, but must have a mechanism to prevent healthy people from opting for cheap, skimpy insurance plans and causing prices to spike for sicker people who want to buy more robust plans.

Seeking Votes

“I like Ted’s idea as long as we have a connection between the essential health benefits pool rate and his proposal for multiple other plans,” Rounds said. “There has to be a ratio between the two that you maintain. Otherwise you’ll run everybody out of that plan — that’s healthy — and into the less expensive plans.”

Rounds indicated that Republicans are far from consensus on a bill.

“We’re just trying to get to 50 votes,” he said. “We’ve got a lot of work to do yet.”

But in another layer of complication for Republicans, Senate Majority Whip John Cornyn of Texas indicated that it may face procedural hurdles.

“There’s a lot of support for giving people choices in the marketplace and that could have downward pressure on premiums,” he said. “But obviously doing this in the budget reconciliation process, we can’t do things necessarily to the extent we’d like to.”

—With assistance from Laura Litvan. 

— Check out ACA, State-by-State: A Q&A With South Dakota Director of Insurance Merle D. Scheiber on ThinkAdvisor.


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