July 14, 2017

The Honorable Mitch McConnell
Majority Leader
United States Senate
Washington, DC 20510

The Honorable Charles Schumer
Democratic Leader
United States Senate
Washington, DC 20510

Dear Leaders McConnell and Schumer:
As the U.S. Senate considers the Better Care Reconciliation Act, we are writing to urge
you to strike the "Consumer Freedom Option" from the bill. It is simply unworkable in
any form and 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.
The Consumer Freedom Option allows insurers to sell products that must comply with all
rules in current law alongside plans that do not comply with current insurance reforms –
meaning they are allowed to refuse offering coverage to certain people, charge different
rates based on age and gender, and not provide comprehensive health benefits. This
would allow the new plans to “cherry pick” only healthy people from the existing market
making coverage unaffordable for the millions of people who need or want
comprehensive coverage, including, for example, coverage for prescription drugs and
mental health services.
Some have asserted that a “single risk pool” – which requires insurers to place all
consumers into one pool to determine premiums – as well as additional dedicated funding
for high risk individuals will make this work. That is not the case. The Consumer
Freedom Option establishes a “single risk pool” in name only. In fact, it creates two
systems of insurance for healthy and sick people. A new paper from the American
Academy of Actuaries on risk pooling confirms this view. We also firmly believe that the
dedicated funding included in the bill to address the cost of plans that cover people with
pre-existing medical conditions is insufficient and additional funding will not make the
provision workable for consumers or taxpayers.
As healthy people move to the less-regulated plans, those with significant medical needs
will have no choice but to stay in the comprehensive plans, and premiums will skyrocket
for people with preexisting conditions. This would especially impact middle-income
families that that are not eligible for a tax credit. Taxpayers will pay more to finance

 federal tax credits for the individuals in comprehensive plans and these costs will
continue to increase, even with dedicated funding. Risk adjustment is also critical to
making the individual market sustainable, but can only work when there are uniform
benefit requirements across the market.
Finally, this provision will lead to far fewer, if any, coverage options for consumers who
purchase their plan in the individual market. As a result, millions of more individuals will
become uninsured.
Given our experience and longstanding commitment to providing health care coverage,
we understand what it takes to make health insurance markets work for consumers. We
believe strongly that the rules must apply equally to all insurance products offered in state
individual and small group markets. A level playing field and effective risk adjustment
across uniform benefits is important to assure effective competition, choice and
affordability. The Consumer Freedom Option does not meet these requirements and
would harm consumers who are most in need of coverage. We strongly oppose this
provision.

Sincerely,

President and CEO
America’s Health Insurance Plans

President and CEO
Blue Cross Blue Shield Association