Disruption necessary to reform insurance market

Despite public outcry over insurers canceling individual plans, the Affordable Care Act won't create major disruptions throughout the health insurance industry, according to a policy brief from the Urban Institute.

Besides, making much-needed reforms to health insurance is impossible without some sort of interruption or disturbance to the status quo. "Despite claims to the contrary, it is not possible to reform our health insurance arrangements without somehow disrupting existing arrangements," Judy Feder, a fellow at the Urban Institute's Health Policy Center, wrote in the brief.

"As is, the ACA's disruption is modest in scope, cushioned by subsidies and, over time, will benefit all participants," she added. That's because about 100 million people who receive health insurance through large employers are largely unaffected by the ACA--which was specifically designed around employer-sponsored insurance, not to reform it.

The Obama administration allowing insurers to extend previously canceled policies an additional year won't reduce health insurance market disruptions. Such a step merely "reduces the risk pooling the ACA aims to provide, enabling insurers to continue to cover the healthy and avoid the sick," Feder wrote. Indeed, some insurers say the one-year extension unnecessarily complicates "an already confusing time of change" while increasing costs and risk, FierceHealthPayer previously reported.

Even considering the disruptions created by the ACA, particularly canceled plans, they're less challenging than other reform options like establishing a single-payer system, according to the brief.

To learn more:
- here's the Urban Institute policy brief (.pdf)