Buyer Beware: Ted Cruz Goes Pro-Choice

  

The concept of the Trojan horse is familiar to us all. After a 10 year siege of Troy, the invading Greeks pretended to sail away—but left behind the infamous horse with a group of elite soldiers hidden away inside of it. The Trojans pulled the horse into the city as their victory trophy, and the rest, as they say, is history.

But to understand why the Cruz amendment to the Senate healthcare bill is a Trojan horse that will wreak havoc on the individual insurance market, it’s necessary to understand a more complicated concept: adverse selection.

For health insurance markets to function normally there must be a mix of healthy and sick people that purchase any given product. Adverse selection occurs when purchasers of insurance recognize that they are healthier or sicker than the average consumer, and therefore buy either more or less health insurance.

This becomes a problem when sicker consumers all self-select into one health insurance product, and healthy consumers all self-select into another health insurance product. In that instance, an adverse selection problem has occurred, and the product purchased by the sicker consumers is destined for a turbulent ride as premiums skyrocket and only the sickest of the sick continue to pay them. This is the ominous “death spiral” we so often hear about.

Put in this context, it’s easy to see why the Cruz amendment to the healthcare bill presents an adverse selection problem. The Cruz amendment, as you know, will allow insurers to sell non-compliant health insurance plans alongside compliant plans. These skimpier non-compliant plans will cover fewer maladies, have higher deductibles and copays, will be exempt from requirements to provide preventative care at no out of pocket cost, and will undoubtedly be much cheaper than compliant health insurance plans.

Those who are not yet sick will flock to these plans. And the sick will stick to those that actually provide coverage. But without the benefit of a healthy mix of consumers in the compliant plans, they will be in for a turbulent ride.

If you’re healthy, this may seem like a great deal. The only change you’ll notice at first will be an increase in the number of go-fund me pages you see on Facebook for those who purchased non-compliant plans and made the mistake of getting sick, having a heart attack, or coming down with cancer. But sooner or later, we all make the change from healthy to sick, from subsidizer to subsidized—that’s life, and that’s health insurance. And when we do, we’ll all be a lot better off if we don’t fall for the Trojan horse of the Cruz amendment to the healthcare bill.

Author: Mathew Keller

Mathew Keller is a registered nurse and attorney who advocates for nurses as a Senior Policy Analyst for the American Nurses Association

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