Sketchy HHS Report On Cruz Amendment Keeps Getting Worse

UNITED STATES - JULY 20: Sen. Ted Cruz, R-Texas, arrives for a vote in the Capitol on Thursday, July 20, 2017. (Photo By Bill Clark/CQ Roll Call) (CQ Roll Call via AP Images)
July 21, 2017 2:55 p.m.

A glowing report by the Department of Health and Human Services on an amendment by Sen. Ted Cruz (R-TX) that may be a key piece of next week’s health care vote-a-rama came under immediate fire earlier this week from economists and health care experts.

But additional problems with the report have since emerged, with experts saying it makes “unconscionable” and “farcical” assumptions in order to come up with a unrealistically positive outcome.

The report claims the Cruz amendment, by allowing insurers to sell cheap, bare-bones plans that don’t meet Obamacare’s requirements, would increase health insurance enrollment by millions of people and drastically bring down premiums. But it quickly became clear the analysis was too good to be true, as economists and health care experts flagged that it made a number of extremely unrealistic assumptions, kept its models and sources of data secret, and generally stacked the deck in order to produce a positive outcome.

For instance, they pointed out, the report assumes that 100 percent of people who drop their Affordable Care Act-compliant plans will enroll in a cheaper Cruz plan and that not a single person will go without insurance. It also analyzes how the Cruz plan operates with the Affordable Care Act’s subsidies and tax credits still in place, a scenario no one in Congress is considering, and it compares a 40-year-old’s premiums under the Cruz plan to premiums under the Affordable Care Act averaged across all ages.

Politico broke the news this week that the consulting firm McKinsey—whose 2011 report on the Affordable Care Act proved to be wildly inaccurate—produced the analysis for HHS. They clarified this week that the company “produced the underlying data and developed the assumptions” but HHS assembled the final report.

McKinsey, for their part, has refused to disclose the details of their involvement.

On a call with reporters on Friday, former McKinsey consultant Bob Kocher torched the report, comparing it to President Trump’s budget containing a $2 trillion dollar error.

“When you dig beneath the surface, you find an lot of asterisks and wishful thinking,” he said. “For instance, they believe young people will buy plans with 12 thousand dollar deductibles that don’t cover things like pregnancy, and then not go bankrupt. This seems like a farcical assumption.”

Kocher, who also worked as a former special assistant to President Obama on health care and economic policy, noted that the HHS findings go against those of every other entity that has analyzed the Cruz amendment.

“What every actuary, independent economist, and even the Blue health plans have said is if you were to do the Cruz amendment and create two risk pools, you will trigger a death spiral. It would very likely lead to very few insurers offering ACA plans.”

Blue Cross Blue Shield and the insurance trade group America’s Health Insurance Plans wrote a rare joint letter to the Senate earlier this week to warn them that the Cruz amendment is “simply unworkable in any form.”

“It would undermine protections for those with pre-existing medical conditions, increase premiums and lead to widespread terminations of coverage for people currently enrolled in the individual market,” they wrote.

With just days to go before a vote on health care with the potential to impact one-sixth of the American economy, the Senate received an analysis of Senate leadership’s main Obamacare replacement proposal from the Congressional Budget Office, but that report left out the Cruz amendment, a piece many senators say is key to winning over their votes.

Instead, senators have to rely on HHS’ sketchy review.

“We’ve gotten some good information from HHS on that, but I hope the CBO scores it,” Sen. Jeff Flake (R-AZ) told TPM. “I can’t imagine it won’t bring down premiums significantly.”

The CBO says they are still reviewing the Cruz amendment, but there is no guarantee they will provide a score by the time the Senate votes next week.

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