4 ways to stabilize the individual marketplaces

Health insurance benefits form
Adjustments in a few key areas could bolster the individual insurance market. Getty/michaelquirk

The future of the Affordable Care Act is still unclear, but a few key steps could make the law’s beleaguered individual marketplaces more sustainable, according to a new report.

The American Academy of Actuaries issued a brief detailing four areas for improvement that would bolster the individual market. This is especially important, they note, as major payers are leaving the ACA’s marketplaces or severely reducing their offerings, impacting competition and inflating premiums significantly.

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“Actions [must] be taken to reduce legislative and regulatory uncertainty and to improve market stability,” the group concluded.

The four steps toward improvement they suggested are:

  1. The government must continue to fund cost-sharing reduction (CSR) payments. Continued cost-sharing payments will curb what are likely sharp premium increases, according to the actuaries, and prevent more payers from exiting the markets. The future of CSR payments is in flux, though, as House Republicans have successfully challenged them in court and their future now lies with the Trump administration, which is mulling the payments as leverage to bring Democrats to the table on healthcare reform.
  2. Enforce, and possibly strengthen, the individual mandate. To incentivize people, particularly healthy people, to sign up for insurance, rules like the mandate need to have actual bite, according to the group. So, it must be actively enforced, if not strengthened. Proposals from Republicans in their ACA repeal efforts would eliminate the mandate and replace it with a continuous coverage requirement, which could be a less effective motivator if the penalty is too low, the group concludes.
  3. Increase funding. One solution would be to increase tax credits offered under the ACA, according to the report. Another option could be to use an invisible high-risk pool, which would offset insurer costs and create more balance in the risk pool overall, to decrease premiums—a solution that would prevent increased federal spending on tax credits.
  4. Avoid uncertainty. Payers are anxiously awaiting more direction on the future of health reform, and that could have steep consequences for the individual markets in 2018 if a path forward isn’t clear. The actuaries also note that some proposals for fixing the marketplaces, including selling insurance across state lines or offering more association plans, could disrupt them instead, as it could lead to market fragmentation.