As lawmakers work to translate the “repeal and replacement” of the Affordable Care Act into concrete proposals, the debate over the future of healthcare policy moves to the details embedded in those plans.
“Differences in a reform’s structure can have wide implications for stakeholders and for how it interacts with other reforms that have been or may be adopted,” American Academy of Actuaries Senior Health Fellow Cori Uccello said in a press release. To inform debate, the Academy published three issue briefs that analyze three of the most commonly cited reform ideas.
The use of high-risk pools aims to maintain coverage for enrollees with serious medical conditions without destabilizing the individual insurance market or making overall premiums unaffordable. That means striking a balance between premiums, driven by the overall cost of care in a given pool, and external sources of funding for the cost of care, according to the first brief. This leaves two viable paths to reform:
- “Traditional” pools segregate high-risk individuals from the broader marketplace, mitigating overall premiums in the conventional marketplace. This reduces premium pressure on the “common” pool, but must balance higher premiums (and associated lower enrollment) in the high-risk pools with funding sources to cover the higher cost of care for those individuals.
- Keeping high-risk individuals in the common pool could stabilize premiums and benefits, while providing more room to spread costs, according to the brief. This type of system requires reimbursement among insurers based either upon the overall cost of high-risk patients or the high-risk conditions patients exhibit, both of which require careful implementation to avoid adverse consequences.
Association health plans, which allow employers and individuals to purchase health insurance collectively, offer potential to bend the cost curve on individual premiums—but only if their membership numbers offer sufficient leverage to get discounts out of insurers, according to the second brief. The other key concern with such plans, per the academy, is their potential to create adverse selection if regulations governing them are inconsistent across states, or if they operate under different rules from their competition.
Selling insurance across state lines, meanwhile, aims to counter the relative lack of competitors in some states and increase affordability, as the third brief explains. Because local costs tend to be the biggest driver of insurance premiums, the academy sees limits on the utility of the approach in that vein. Precise regulation to counter the potential for adverse selection would be another key factor in the success of such an approach, according to the brief.