Experts call HHS analysis of Cruz health amendment flawed

The analysis from the Department of Health and Human Services said the Texas Republican’s proposal, which would let insurers sell plans that don’t comply with Obamacare as long as they sell one that does, said the amendment would reduce premiums and boost enrollment on the individual market.

But some experts question the methodology and assumptions of the analysis.

Chief among the questions is that the HHS analysis tacks the Cruz amendment onto Obamacare, formally called the Affordable Care Act, rather than the Senate replacement bill called the Better Care Reconciliation Act.

“Far from the only issue, but HHS’s assumption that ACA subsidies stay in place in all scenarios likely has significant effect on results,” tweeted Matt Fiedler, fellow at the Brookings Institution’s Center for Health Policy.

The Cruz amendment would let insurers sell plans that don’t comply with Obamacare’s insurer mandates such as protections that prevent insurers from charging people with pre-existing conditions higher premiums. But Obamacare insurers can do that only if they offer one plan that does comply with those mandates.

The two types of plans would share a single risk pool, which are the participants in a plan, a change from an initial version of the amendment. That change cost the support of conservative Sen. Mike Lee, R-Utah, who wanted the original amendment that had two separate risk pools.

A major question that experts have about the amendment is whether it would cause a death spiral in the Obamacare-compliant market, which presumably would have higher premiums because only sick people would sign up for the plans. On the other hand, the non-compliant Obamacare plans would cost less.

The HHS analysis found that premiums for people who sign up for the Obamacare-compliant plans would fall. An Obamacare-compliant silver plan would cost on average $380 per month in 2024, down from $845 per month projected under current law.

But experts say that the analysis doesn’t take into account major changes in the Senate bill to the tax credit structure to help pay for the cost of insurance.

With the Senate bill’s “smaller tax credits and repeal of [cost-sharing reduction payments that lower copays and deductibles], fewer healthy enrollees would want to stay in the compliant market than with ACA subsidies,” Fiedler tweeted.

Under the Senate bill, the tax credits are pegged to an insurance plan that covers 58 percent of insurance costs and has a higher deductible instead of a plan in which insurers cover 70 percent of the cost, as they are under Obamacare.

Another issue was the analysis looks at premiums for a 40-year-old, while Obamacare’s average premiums were pegged to a 48-year-old. The premiums also didn’t take into account any premium assistance such as tax credits.

Experts say that premiums aren’t the only number to look at when dissecting the analysis.

“If you are trying to digest the HHS model, don’t focus on just premiums,” tweeted Craig Garthwaite, strategy professor at Northwestern University’s Kellogg School of Management. “That low premium in non-compliant market comes with 12k deductible.”

Experts also seemed perturbed that the analysis did not divulge its estimates on elasticity.

Elasticity determines who would buy insurance due to changes in premiums and to plans, but the analysis says that its elasticity estimates are proprietary and didn’t include them.

“The elasticity estimates are the key fulcrum,” tweeted John Graves, assistant professor of health policy at Vanderbilt University. “They determine who gets in the pool, which determines premiums & overall impact. So if you pull an elasticity estimate out of a hat, you can get whatever answer you want. Which is why models are transparent about them.”

HHS did not return a request for comment on the criticisms of the analysis.

The conclusion that insurance enrollment could rise under the Cruz amendment “isn’t surprising, with premiums decreasing for healthy people,” tweeted Larry Levitt, senior vice president for the nonpartisan Kaiser Family Foundation.

Levitt added that the analysis is opaque on how a single risk pool for Obamacare-compliant and non-compliant plans would be created.

The analysis comes at a pivotal time in the healthcare debate as GOP leadership aims to revive its bill to partially repeal and replace Obamacare. Top administration officials are meeting with Senate GOP holdouts Wednesday night to get them on board.

It is not clear if the Senate will have a score from the nonpartisan Congressional Budget Office before voting on the amendment.

Sen. Ron Johnson, R-Wis., said upon returning from a meeting with all GOP senators at the White House that CBO has previously said it would be difficult to score the amendment because of its complexity.

“The Cruz amendment might be difficult and we may have to rely on the HHS score on that,” Johnson said.

Senate Majority Leader Mitch McConnell’s office did not return a request for comment on CBO timing.