Ted Cruz has a big idea that just might unlock a Senate health care deal

An amendment is under consideration that maybe, just maybe, could unlock the whole Senate Republican health bill. It might knock over the dominoes necessary for a deal, starting with regulations, moving to tax subsidies, and ending up with more cash for Medicaid and fewer tax cuts for the rich.

It comes with big long-term risks for Americans who have high medical costs — and it could ultimately shift the burden of covering the uninsured further way from middle-class Americans who already have insurance, and more onto predominantly wealthy taxpayers.

Senate conservatives have been searching desperately for a way to unwind more of Obamacare’s insurance regulations as part of the chamber’s health care bill. They are withholding their support for the current leadership plan because it does not go far enough on that front.

It has been a vexing quest. Obamacare’s protections for people with preexisting conditions — the requirement that health plans cover every American regardless of health status and the prohibition on charging sick people more than healthy people — are overwhelmingly popular. That makes many less ideological senators skittish about rolling those regulations back. Then there is also the problem of the Senate procedural rules, which limit what policies Republicans can include in their plan.

Cruz, an anti-Obamacare firebrand who has staked much of his reputation on helping shepherd this health care bill through the Senate, has maybe/possibly found a compromise.

No legislative text of Cruz’s proposal is yet available, but this is the gist: As long as a health plan offered at least one Obamacare-compliant plan in a state, the plan would also be allowed to offer non-Obamacare-compliant plans in that state.

Nothing is certain, but I’m told this is the main conservative ask on the health care bill right now. Senate Majority Leader Mitch McConnell (R-KY) is working hard to find a compromise by the end of the week, after the embarrassment of postponing a vote on the legislation until after July 4.

If conservatives get that win on insurance regulations, they might be willing to accept fewer tax cuts for the wealthy in the bill. Smaller tax cuts would, in turn, free up more money for McConnell to spend on Medicaid and insurance subsidies for poor and middle-class Americans. Those concessions are likely necessary to win over moderates who currently oppose the bill, some of whom are already agitating to scale back the tax breaks for the rich.

Every part of the plan is fickle, and McConnell’s margin for error is nil. But as he scrambles for a deal in the next few days, this might be his best bet. If it came to pass, it would represent a significant restructuring of who picks up the tab to cover the most vulnerable Americans.

If conservatives had it their way, they would probably repeal all of Obamacare’s insurance mandates: the preexisting conditions protections, the requirement that plans cover certain essential health benefits, the rules for how much of a person’s medical costs a plan must cover, etc. They say those mandates have driven up health insurance premiums, and lowering premiums is their No. 1 policy objective.

But Americans are strongly supportive of, for example, requiring plans to cover everybody no matter their health: 69 percent approve, according to November 2016 poll by the Kaiser Family Foundation.

President Donald Trump also promised during his campaign to protect people with preexisting conditions. Some Republican senators therefore refuse to repeal the regulations nationwide.

“The president very explicitly said over and over again during the campaign that he wished to preserve guaranteed issue,” Sen. Bill Cassidy (R-LA) told me Wednesday. “We criticized Obama when he broke campaign promises. So I think we need to be sensitive to the contract our leading Republican made with the voters.”

Such a provision might also violate the Senate procedural rules that Republicans are using to pass the bill with a bare majority of 50, which are supposed to limit the health care bill to policies that directly affect federal spending and revenue.

So while some conservative senators, like Ron Johnson of Wisconsin, have been advocating in recent days for fully repealing Obamacare’s insurance reforms, that seems politically and procedurally unpalatable.

Cruz’s proposal could thread the political needle, but it has big policy asterisks

Enter Cruz. Here’s how the Texas senator described his plan, in his own words, on Wednesday:

If an insurance company offers at least one plan in the state that is compliant with the (Obamacare) mandates, that company can also sell any additional plan that consumers desire.

What that does is it maintains the existing protections, but it gives consumers additional new options above and beyond of what they can purchase today.

As a matter of politics, you could see how the idea would be a winner: Moderates can say they kept Obamacare’s insurance reforms and conservatives get to say they allowed non-Obamacare plans back on the market.

The fundamental problem is sicker people would be drawn to the more robust Obamacare plans, while healthier people would gravitate toward the skimpier non-Obamacare coverage. That’s a reality that even Cruz acknowledges.

Then inside the Obamacare market, as more and more sick people buy coverage there, costs for health insurers go up and so they increase premiums. It has the makings of a classic death spiral. Because only sick people remain, premiums eventually increase to astronomic levels. It turns the Obamacare exchanges into a high-risk pool.

Cruz’s counter, when I asked him about this, was the Obamacare subsidies that the Senate bill is largely keeping, though it scales them down. Under Obamacare, people who receive the subsidies are partially inoculated from premium increases because they pay only a certain percentage of their income for health insurance. The Senate’s bill also includes upward of $100 billion to further subsidize people with high medical costs.

“You would likely see some market segmentation” Cruz told me. “But the exchanges have very significant federal subsidies, whether under the tax credits or under the stabilization funds.”

That is true. But outside experts argued that the costs to the federal government could be unsustainable. As the Obamacare markets turned into high-risk pools, premiums would increase, driving the cost of the tax subsidies higher and higher.

“Keeping the ACA tax credits would, in theory, protect subsidized consumers,” Larry Levitt, senior vice president at the Kaiser Family Foundation, told me. “But the cost of those tax credits would quickly skyrocket, because healthy people would flock to non-complaint plans, which could cherry pick them with inexpensive premiums.”

Cruz acknowledged that his plan would depend on taxpayer subsidization of people with high medical costs. But, he argued, it was better for the federal government to pick up the tab than requiring health plans to charge sick people and healthy people the same premiums, increasing costs for the latter.

“It’s not fair to a working-class person who’s struggling to put food on the table, for the federal government to double their premiums trying to work an indirect subsidy for others who are ill. Far better to have it through direct tax revenue,” Cruz told me.

So it becomes a question of the federal government’s willingness to pay that bill, indefinitely into the future. Otherwise, people with high medical costs could be stuck with a market that doesn’t function and isn’t adequately subsidized. The whole idea is dependent on an effectively unlimited federal commitment to pay the bills.

“The marketplaces would turn into de facto high-risk pools,” Levitt said. “How long would Congress allow the ACA tax credits to stand as the costs increase rapidly?”

The other problem is that the Obamacare subsidies cut off at 400 percent of the federal poverty level, about $48,200 for a single person. The Senate plan would lower that threshold to 350 percent.

Americans with higher incomes who wanted to buy an Obamacare-compliant plan, people likely to have high medical costs themselves, would have no protection from skyrocketing premiums.

“If they're healthy, they could buy inexpensive non-compliant plans. But if they have pre-existing conditions, they'd be stuck in plans with escalating premiums,” Levitt said.

Nevertheless, Cruz’s proposal represents a pragmatic attempt to bridge the policy and political divides within the Senate Republican conference.

It is also a notable admission that Congress, even under control of Republicans, recognizes the need for the federal government to help many vulnerable Americans afford health coverage.

“If those with seriously illnesses are going to be subsidized, and there is widespread agreement in Congress that they are going to be subsidized, I think far better for that to happen from direct tax revenue rather than forcing a bunch of other people to pay much higher premiums,” Cruz said.

If McConnell adopted the proposal — Cruz’s office declined to comment on the ongoing Senate negotiations — it could start knocking over dominoes that would bring Republicans closer to consensus on a health care bill.

First, moderates would need to accept it as an adequate protection for people with preexisting conditions. Then the conservatives, having won a victory on their biggest priority, could then be willing to bend on some other issues. They might, for example, be open to keeping some of Obamacare’s taxes to pay for moderate priorities.

Some of those more moderate senators, such as Mike Rounds of South Dakota, said Wednesday that they wanted to limit the tax breaks for the wealthy to help boost the funding for poor and middle-class Americans.

“The challenge is if we do things, we also have to find a way to pass for it,” he told reporters. “I think we ought to to take a look at the investment tax that’s in the system and whether or not it would be appropriate to allow that tax to remain so that we can afford to pay for some of these additional costs.”

That would allow McConnell to pump more funding into Medicaid, the insurance subsidies and the opioid crisis. The majority leader is already adding money to the bill; Politico reported funding for the opioid crisis would be increased from $2 billion to $45 billion. But that probably won’t be enough: Sen. Shelley More Capito (R-WV), one of the senators most focused on Medicaid and opioids, said her core concerns were with the current bill’s Medicaid cuts. More funding, perhaps facilitated by Cruz’s proposal, could help.

The math will always be tough, because leadership can lose only two of the 52 Senate Republicans. Everything would have to fall into place. But such a grand bargain could conceivably get a majority behind the plan.

The other looming threat to Cruz’s proposal is the Senate’s “Byrd Rule,” which is supposed to limit the health care bill to policies that directly affects federal spending and revenue. Many outside experts are doubtful that changes to insurance regulations meet that standard.

But Cruz told me Wednesday that he thought his proposal would work under those rules and that the Senate would not have to take the drastic step, as he had previously advocated, of overruling the Senate parliamentarian who adjudicates these issues.

“I think under the plain text of the Budget Act of 1974, it satisfies the Byrd test,” he said.

But what is most frustrating of all - not a single plan put forward has done a SINGLE thing to address the REASONS for the skyrocketing healthcare costs (with or without ObamaCare).

“Cruz, an anti-Obamacare firebrand..”

Cruz is not just anti-Obamacare, he is a constitutionalist. As such he is fully aware that any implementation of healthcare by the Federal Government is ILLEGAL!

Unless, healthcare is written into the constitution.

Cruz knows.. “The power of healthcare is not delegated to the United States by the Constitution, nor prohibited by it to the States, and the power of healthcare is therefore reserved to the States respectively, or to the people.” [10th amendment]

So, since the power of healthcare is not delegated to the United States by the Constitution, it illegal if the feds just take the power.

The only way for the feds to take the power is to have healthcare specifically delegated to the United States by having the states pass an amendment. Just like alcohol. No amendment, no power!

No amendment, no power. Otherwise, the power has been taken by force, and it is tyranny!

PASS THE AMENDMENT!!

Thanks for posting this. However it’s so loaded with socialist perspective it’s almost incomprehensible to me, anyway. For starters, this is false — utter BS “It has been a vexing quest. Obamacare’s protections for people with preexisting conditions — the requirement that health plans cover every American regardless of health status and the prohibition on charging sick people more than healthy people — are overwhelmingly popular. “. BULLKRAP! We are acquainted with perhaps 300 liberals/ proto-commies and nary a one has said they like Obamacare. They realize it’s a very dysfunctional unworkable scheme and ESPECIALLY MOST PARTICULARLY the quoted provisions!!! Some leftists still want us taxpayers to pay for rheir medical care - but they want it to at least work. They don’t find Obamacare at all “popular” or to their liking. We need to hold congress’ feet to the fire to repeal Obamacare now. Let the states provide whatever free medical insurances they may wish. If socialized medicine is “popular” in a state, that state’s politicians will “provide” it there.

Well, one thing they could do is to make those damn drug ads illegal. I only watch Fox News these days, but I swear that 75% of the ads are for some drug or another. Evidently the medical profession / drug companies won’t rest until EVERY American is hooked on one (or preferably more) drugs, and run to their Doctor for every imaginable test (so they can get hooked on MORE drugs).

It’s vile, and it’s GOT to be causing an up-tick in Doctor visits (and consequently insurance costs).

I actually thought this was always in the bill. Having to pay for abortions, maternity, pediatrics, drug rehab, sex changes, things I will never need now has prevented me and many others from being able to afford insurance. I’d be willing to pay for risks that pertain to me. I got flamed for saying this previously, but I am talking about buying an individual policy, not a group policy, which is what was confusing many.

Along with removing all of the federal agencies and offices and staff, as well as the federal record-keeping of all medical records.

Damn straight that’s what conservatives want.

The repeal of the (un)Affordable Care Act, lock stock and barrel like McConnell told us he would.

It is not fair at all that those who choose to live more healthy in their lifestyle must bear the brunt of costs for those who choose to smoke, drink, drug, and self-abuse themselves into chronic illness (and health care costs).

Group coverage, including the older more private style, has that as an inherent feature. BTW, you left out male homosexual acts, which are more destructive medically and costly to treat than all those others put together.

The smokers are getting hit by most employer coverage, if tat makes you feel better. What they take in healthcare coverage (which is debatable, as a 90 year-old with alzheimers is just as expensive as a smoker who gets cancer at a younger age), the smoker gives some of it back by losing out on a decade of Social Security.

PASS THE AMENDMENT!!

I need to make this clear.

I AM NOT speaking about the amendment referred to in this article.

I AM referring to a Constitutional amendment. Just like with alcohol.

It sounds to me like he is saying Anthem, Aetna, etc....will be allowed to sell non-Obamacare compliant insurance for any price and with any coverage that consumers desire AS LONG AS they also sell an Obamacare compliant plan in the state.

The idea is that the healthy will migrate to the “free market” plans and the sick will stay with the Obamacare plans.

The way I see it is that the problem with health care is that anti-competitive and non-free market forces have greatly increased the price of service. If you don’t address those issues you are only rearranging the chairs on the Titanic.

Either sick people are going to be able to pay for their own health care (just like hungry people pay for their own food and naked people pay for their own clothes) ....OR healthy people will be forced to pay for the health care of sick people. Those are the only two options as I see it. Currently healthy people are being forced to pay for it through higher premiums. It sounds like under Cruz’s plan they will be forced to pay for it through taxes.

Interesting proposal. It pits government insurance directly against open market insurance - let the better plan win.

My idea is more simple. Revoke every single waiver issued by Obama and vigorously enforce Obamacare’s taxes. In other words, go full throttle Obamacare. Congress and all the others lose their waivers. Unions have to pay the Cadillac tax, restraunts in Pelosi’s district lose their waiver, and so on.

Let America feel the full harms of Obamacare. Then we can have a sane discussion about open markets and individual liberty.

When asked if Obamacare was constitutional Pelosi just laughed. Constitutional? Bwhahahaha!

Now our entire senate takes the same attitude. And the SCOTUS is sure to follow.

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