Ted Cruz’s “Consumer Freedom Amendment” Gets to Crux of Obamacare Debacle

“Why pay thousands of dollars a year for a health care plan with high out-of-pocket costs that will likely never be used?”

I’m not a huge fan of Ted Cruz. Within D.C., he’s known to be a horrible person to work with, and on the campaign trail he struck me as disingenuous. I’m not mentioning this so that I can take a shot at Cruz, but instead to be frank about my own personal prejudices. It’s important to consider every idea and policy put forward by every politician, regardless of your opinion on the individual. And Cruz’s recent comments on health care raise some very important points. Among others, the current Obamacare system shifts the burden of covering the sick onto the healthy.

Cruz took his “Consumer Freedom Amendment” to the Sunday talk show circuit this past weekend, generating buzz, praise, and of course, backlash. Under the amendment, the healthy would essentially be freed from the burden of having to cover the sick. Even as someone who’s generally opposed Cruz, many of his points were relevant and raised serious issues.

Cruz’s proposal seems to acknowledge that expensive health care is indeed a burden, and that many Americans need help. In particular, older and poorer individuals may not be able to pay for health care on their own. Cruz doesn’t believe that this burden should be pushed onto younger or otherwise healthier individuals. Instead, the government should be responsible for the subsidies.

Under Cruze’s plan, health care would be “segmented” into two groups. Healthier people could buy stripped down down health care. Unhealthier people would be given access to more expansive plans — ones that would be subsidized by the government.

It’s an interesting twist in the health care debate. The proposal should be discussed, at the very least.

The Burdens of Obamacare

Under Obamacare, insurers are limited in how much extra they can charge customers based on their age and health. On the surface, this sounds like a decent policy. However, in practice, it creates some exceptional burdens for people who might not be in a viable position to bear those burdens.

For example, Obamacare caps the price differences between young people and old people. Older individuals can only be charged 3X as much as younger individuals. This doesn’t sound bad, but it has dramatic effects on the insured, especially the young.

First, many of the millennials who might be tempted into buying health insurance are generally quite healthy. They might go through their twenties and even thirties without needing any health care at all. Under an unregulated market, health insurance for such individuals is quite cheap. Insurance agencies calculate the costs to cover these people, put in a bit of a profit margin, and then sell the insurance policies. (For the record, I don’t believe that the free market is a cure-all for our health care ills.)

Under Obamacare, health care premiums for young people have risen sharply. As a result, many have simply chosen not to take out coverage. Why pay thousands of dollars a year for a health care plan with high out-of-pocket costs that will likely never be used?

It’s popular these days to slam millennials as the scourge of society, but many millennials are facing the same problems as older generations. Shifts in the global economy are causing many jobs to move offshore. Costs for housing, college tuition, cars, car insurance, groceries, and pretty much everything else, are rising.

Most millennials buying health insurance through Obamacare are likely those who are already struggling. For young people trying to get ahead in life, shouldering the burden of older generations’ health care might simply be too much.

Older people, unfortunately, suffer from far more health issues. Their health care is generally much more expensive as a result. Under Obamacare, a big part of this tab is picked up by the young and healthy. If millennials were rolling in dough, this wouldn’t bother me, but again, many of millennials using Obamacare are already on a tight budget.

Cruz’s Consumer Freedom Amendment is putting this issue front and center. Costs for the older and unhealthy would be picked up by the government, and thus society as a whole. Maybe that’s not the answer, but it’s an interesting concept and something that our society needs to discuss.

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