How Cruz's health insurance plan makes coverage more secure

The “Consumer Freedom Amendment” Sen. Ted Cruz (R-Texas) has offered to the Senate healthcare bill would make access to healthcare more secure for patients who develop expensive conditions. Critics of the amendment fail to understand how health insurance markets work.

The Cruz amendment would allow individuals to opt out of ObamaCare’s costly health-insurance regulations — but only if insurers simultaneously offered ObamaCare-compliant plans to all comers, including patients with preexisting conditions.

Sen. Shelley Moore Capito (R-W.V.) says the amendment “would make it too difficult for people with pre-existing conditions to get coverage.” Sen. Chuck Grassley (R-Iowa) commented, “If it … has the effect of annihilating the pre-existing condition requirement that we have in the existing bill, then obviously I would object to that.”

In fact, it is the “preexisting condition requirement” these senators want to protect that is jeopardizing access to care for the sick.

ObamaCare’s preexisting-conditions provisions are no more than government price controls. These “community rating” price controls force insurers to charge all enrollees of a given age the same premium, regardless of health status. But forcing insurers to charge healthy people more, and sick people less, than they cost to cover creates more problems than it solves.

Thousands of years of experience have shown government price controls only make matters worse. As former Clinton and Obama economic advisor Larry Summers warns, “price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time.” ObamaCare’s price controls are no different. They are increasing premiums, reducing choice, making coverage worse for the sick, and threatening to make health insurance disappear entirely.

ObamaCare’s price controls injected adverse selection into the individual market and are therefore a driving force behind the doubling of individual-market premiums nationwide since 2013. Average premiums have increased 110 percent in Iowa and 169 percent in West Virginia.

Harvard economists concluded sick patients “cannot be…