Stability and sustainability in health insurance marketplaces requires a more balanced risk profile for enrollees and rules that are communicated clearly and quickly to payers, according to a new report.
The analysis (PDF), published by the American Academy of Actuaries, examined the state of insurance markets under the Affordable Care Act and noted that, while the law’s implementation did slash uninsured rates, individual marketplace enrollment was lower than anticipated and many enrollees aren't healthy. To be most effective, the report states that more healthy people need to enroll to help offset the costs of the most ill people.
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One possible solution is to offer stronger incentives to encourage people to purchase coverage, according to the report. Increasing penalties for not enrolling in an insurance plan, increasing premium subsidies or establishing a permanent reinsurance program are ways to adjust the risk pool. Elements of the ACA, like its individual mandate and annual open enrollment period, aim to reduce that risk, but more work can be done, the report notes.
“Many options have been put forward to improve the short- and long-term sustainability of the individual market, either through changes to the ACA or by replacing the ACA with a different approach,” according to the report. “If as part of this a goal is to provide coverage to people with pre-existing conditions at standard premiums, it is vital to enroll enough healthy people to spread the costs of those who are sick.”
A repeal of the healthcare law looms under a Trump Administration, and a clear path to a repeal through the budget reconciliation has been paved by Republicans in both the House of Representatives and the Senate. One major point of concern for the law’s opponents has been skyrocketing premiums for ACA marketplace plans in certain states, particularly those where competition is limited.
The report also noted the continued rise of healthcare costs. Because most premiums go toward paying medical claims, reducing healthcare costs goes hand in hand with keeping premiums down. Cutting health spending to a more manageable level “is a key to the sustainability of not only the individual market, but also the healthcare system as a whole,” the report said.