Pallone & Neal Investigate HHS’s Cruz-Lee Amendment Analysis

Jul 25, 2017
Press Release
“The vague and unrealistic assumptions that underlie HHS’s analysis of the Cruz-Lee amendment raises serious concerns”

WASHINGTON, DC – Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ) and Ways and Means Committee Ranking Member Richard Neal (D-MA) sent letters to Health and Human Services (HHS) Secretary Tom Price and to McKinsey & Company today raising serious concerns over HHS’s analysis of an amendment to Trumpcare offered by Senators Ted Cruz (R-TX) and Mike Lee (R-UT).  The so-called Cruz-Lee amendment would allow insurers to sell plans that do not comply with rules under the Affordable Care Act (ACA) as long as they also offer ACA compliant plans. The analysis of the amendment was issued by the Assistant Secretary for Planning and Evaluation (ASPE) last week and received widespread criticism for its highly unlikely findings and the lack of transparency on the analysis’ methodologies.

“We are concerned by the HHS’s lack of transparency about how this study was conducted and we have questions about its opaque – and in at least some cases, flawed – methodology,” Pallone and Neal wrote to Secretary Price. “The study’s conclusions contradict assessments of the Cruz-Lee amendment offered by insurers, actuaries, and economists – all of whom have concluded that the proposal would destabilize the individual market and result in skyrocketing premiums for individuals with pre-existing conditions.”

According to press reports, McKinsey & Company was contracted by HHS to provide analysis on the amendment before it was released by ASPE last week. The agency’s analysis of the Cruz-Lee amendment’s impact on the individual health insurance markets was vastly different from analysis from other health industry experts including the insurance industry’s own assessment of the amendment. While almost all other health experts concluded the Cruz-Lee amendment would result in mass coverage losses and premium increases, HHS’s analysis concluded the amendment would expand coverage and lower premiums.

To better understand the process and methodology behind the analysis, Pallone and Neal are requesting  information from HHS and McKinsey & Company, including: 

  • An explanation of the role played by McKinsey & Company, and any other outside entity or organization, in conducting the study.
  • A copy of any communications with McKinsey & Company, including any communications about the scope of the analysis, and any instructions regarding the methodology and any applicable assumptions to be used.
  • A detailed explanation of how the “single risk pool” requirement would operate across ACA-compliant and non-ACA compliant plans, and an explanation of why the Cruz-Lee amendment would not result in segmentation of the individual market, as concluded by actuaries, insurance companies, and health insurance experts.

Copies of the letter are available here.