Insurers condemn Cruz-Lee plan to loosen insurance rules

Health insurers are blasting an effort by conservatives to modify the Senate Obamacare repeal bill and set up a two-tier market in which companies could sell plans that don’t meet Obamacare’s coverage requirements.

Their big concern, according to documents obtained by POLITICO: The plan by Ted Cruz and Mike Lee would threaten access to coverage for individuals with costly medical conditions.

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.

Cruz and Lee are pushing the amendment as a way to increase consumer choice and bring down premiums in the individual market. But the pointed criticism by insurers is likely to embolden Senate moderates who are wary of any plan that might jeopardize access to coverage for individuals with costly medical needs.

Insurers have until now taken a nuanced stance on the GOP’s Obamacare repeal efforts. They’ve praised Republicans for including provisions designed to stabilize the individual market in the near term, but they’ve also criticized the roughly $800 billion in cuts to Medicaid included in the House and Senate bills.

AHIP CEO Marilyn Tavenner had an hour-long meeting in the office of Majority Leader Mitch McConnell the day before the Senate’s draft repeal plan was released last month. The hostility of insurers to the Cruz-Lee amendment is likely to cause further headaches for the Senate’s stalled effort to pass a repeal package.

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