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The insurance industry was largely against the ACA’s requirement that all non-grandfathered individual and small-group health insurance policies provide minimum essential benefits such as maternity coverage, mental health and substance abuse disorders, emergency care and preventative services. They were opposed because these requirements reduced the number and types of policies that could be sold and raised the costs of new ones.
But now that they are in place, the insurance industry has done a 180. In a rare public statement about the current healthcare reform debate, large insurers have blasted the amendment offered by Ted Cruz and Mike Lee to allow insurers to offer policies that don’t meet these requirements.
Why? Because now that these plans are in place, they have insurance risk pools built around them. If the risk pools splinter, it means that some pools are vulnerable to “adverse selection,” which is insurance-speak for having more people who need their insurance benefits than there are people to pay for them. Lobbyists for the insurance companies and insurance agents are working behind the scenes to stabilize health insurance markets in the post-ACA world, and this amendment would destabilize the market in a major way.
In a letter sent to Cruz and Lee today, Blue Cross Blue Shield Association CEO Scott Serota warns that the proposal is “unworkable as it would undermine pre-existing condition protections, increase premiums and destabilize the market.”
America’s Health Insurance Plans additionally is circulating a memo that raises similar concerns about the individual insurance market.
“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,” reads the AHIP memo.