The key, now, to passing the Senate health care bill is winning over the votes of at least Texas Sen. Ted Cruz and Utah Sen. Mike Lee. The key to winning over Cruz and Lee is to include Cruz’s “Consumer Freedom” amendment in the bill, which would allow insurers to sell individual market plans that don’t comply with Obamacare’s regulations so long as they also sell at least one plan in the same market that does. And the key to getting Cruz’s amendment in the bill is to ensure that it won’t scare away more votes than it gains.
The Cruz amendment, as currently proposed, would cause too many moderates to flee, since it would undermine pricing protections for those with pre-existing conditions. Because young and healthy people would opt for the cheap, skinny, noncompliant plans, the risk pools for Affordable Care Act–compliant plans would fall out of balance, and premiums could spiral out of control as only the sickest people signed up for them. Though people making up to 350 percent of the federal poverty line (about $40,000) would be insulated from those premium increases with the aid of federal subsidies, those above that line who wanted compliant plans might have to pay, say, infinity dollars in premiums. The Cruz amendment, in short, sets up a classic adverse selection problem that could price those with pre-existing conditions out of the market.