For some people with high-cost conditions in waiver states, the last Congressional Budget Office score predicted that “premiums in the nongroup market could be very expensive for at least a short period of time.”

That’s why—starting with early drafts of the American Health Care Act in the House—Republicans have created funds to basically pay for all those increasing premiums for sicker people. Notably, as their plans have tended towards more and more relaxed rules for insurers, those funds have gotten larger. Each round of relaxation of insurance rules comes with more funding that is essentially earmarked for helping smooth distortions.

Cruz’s amendment is no different, and it creates even more distortions. Along with another new provision in the base BCRA allowing exchange consumers to receive tax credits for purchasing catastrophic coverage, the Cruz amendment would essentially create two entirely separate tiers of subsidized insurance. The lower tier would feature a collection of low-premium plans with either scarce benefits, high deductibles, or both.

The higher tier would feature the kinds of plans in exchanges now, although perhaps with higher deductibles, more cost-sharing and slightly fewer covered services on average than today. In the absence of a mandate especially, it seems rather obvious that healthy people with relatively low risk of serious conditions in the future would tend to either go without insurance or select the lower tier, and sicker people would choose the higher tier.

Thus, the Cruz amendment creates almost a textbook scenario of wide-scale adverse selection—whereby riskier and more expensive patients wind up concentrated in risk pools—and entirely undermines any tools for managing that adverse selection. Of course, the loss of a mandate threatens to do this as well, just by virtue of letting millions of healthier people leave exchanges entirely. But the Cruz plan elevates that risk by further splitting the risk pools of those who choose to remain insured, and providing even more of an incentive to leave robust exchange markets.

The Kaiser Family Foundation finds that under the Cruz amendment:

The likely result would be that the cost of ACA-compliant plans would skyrocket. The ACA-compliant plans would effectively become a high-risk pool, attracting enrollees when they need costly health benefits – such as maternity care, or drugs to treat cancer or HIV, or therapies to treat mental health and substance abuse disorders – and those with pre-existing conditions who are turned down by non-compliant plans or charged high premiums based on their health. By contrast, non-compliant plans would attract healthier consumers, at least as long as they didn’t need coverage for such benefits.

For people who make less than 350 percent of the federal poverty line and are eligible for premium tax credits under the BCRA, those credits would likely hide premium increases, since they can adjust to limit how much a household spends on insurance. But for people above that threshold, the Kaiser Family Foundation analysis finds that the real cost of insurance would make exchange plans more and more unaffordable or inaccessible. That goes doubly so for the 1.5 million in that group people with pre-existing conditions, since off-exchange plans would likely still bar people with those conditions from enrolling.