Health Insurance

Top health insurance lobbying group blasts 'Cruz provision' expected in GOP Obamacare-replacement bill

Key Points
  • The provision is expected to let insurers sell plans that don't comply with some key Obamacare rules.
  • It could lead to lower premiums for healthy customers, but much higher premiums for sick ones.
  • The insurance lobbying group AHIP says such a provision would lead to "unstable health insurance markets."
Sen. Ted Cruz (R-TX) speaks with reporters about the Senate health care bill on Capitol Hill in Washington, U.S., July 12, 2017.
Aaron P. Bernstein | Reuters

The leading health insurance lobbying group is heavily criticizing a new provision that could be in the revised GOP Obamacare replacement bill, saying it would lead to "unstable health insurance markets."

America's Health Insurance Plans said that the so-called Cruz provision would lead to lower enrollment in individual health plans by younger, healthier people, while at the same time leading to "unaffordable premiums for those with pre-existing [health] conditions."

"Policy solutions exist to create more stability in the market by reducing premiums and attracting enrollment of younger and healthier individuals," AHIP said. "In this context, it is important that policymakers avoid policies that threaten to further increase uncertainty or threaten stability."

The provision, created by Sen. Ted Cruz, R-Texas, is expected to allow insurers selling individual plans that comply with Obamacare rules to also sell "noncompliant" plans in the same states.

Noncompliant plans would not be subject to rules that bar insurers from denying coverage to sick people, charging sick people higher premiums, and excluding coverage for pre-existing conditions.

The noncompliant plans also would not be bound by current limits on how much money customers can be charged in the form of copays and deductibles when they obtain health services.

AHIP said the provision would essentially split the individual insurance market, which serves people who don't have coverage through a job or Medicare or Medicaid, into two separate markets.

One would be the current Obamacare plans that are sold on government-run marketplaces, which would cost more than other plans but would tend to disproportionately attract sicker customers who needed the guaranteed benefits.

The other market, AHIP said, would be noncompliant plans, which would attract younger, healthier customers because of their lower premiums. reported Thursday that the draft of the revised Republican bill set to be unveiled in the Senate later Thursday will include the Cruz provision. NBC News confirmed the provision will be in the so-called Better Care Reconciliation Act.


However, Sen. Mike Lee, the Utah Republican who was working on the amendment with Cruz, tweeted later that what he was crafting with Cruz was not in the bill, although "something based on it has" been added to the legislation.



AHIP said that "stable and well-functioning insurance markets" require broad enrollment from all types of customers and "a stable regulatory environment that facilitates fair competition and a level playing field."

"Unfortunately, this proposal would fracture and segment insurance markets into separate risk pools and create an un-level playing field that would lead to widespread adverse selection and unstable health insurance markets," AHIP said.