Among health plans in the Affordable Care Act’s individual and small-group markets, population-weighted average risk scores rose about 5 percent from 2014 to 2015.
A recent report from the Society of Actuaries (SOA) analyzes the reinsurance payments and risk adjustment transfer data that the Center for Consumer Information and Insurance Oversight released in late June. The increased risk scores may be the result of identification through better coding as well as a measure of actual population health, according to the report.
The latter is significant because such risk scores help the healthcare industry “identify areas where there are clear needs for effective solutions to delivery and highlight efficiency issues that extend beyond a single health plan,” the report says.
It’s important to note that the reinsurance coinsurance rate for 2015 was 55.1 percent compared to 100 percent in 2014, meaning in 2015 health plans absorbed more of the risk for high-cost members and heightening the role risk adjustment payments play in stabilizing the market, the SOA report adds.
On a state-by-state basis, most states’ risk scores in 2015 correlated well with those in 2014--and they should correlate even more in the future as the ACA markets evolve.
Some states, though, posted significant swings in risk scores. Nevada’s, for example, dipped 8.4 percent, while Alabama’s climbed 17.3 percent.
While rules surrounding transitional policies and Medicaid are not enough to explain by-state differences in absolute risk, it is important in the future to consider such market characteristics when evaluating the consistency and stability of the risk pool, the report notes.
What’s more, SOA points out that coming changes in the structure of the ACA marketplaces--including high-profile insurance carriers slashing their market participation, a new risk adjustment model, the phase-out of transitional health plans, tighter special enrollment periods and full incorporation of ICD-10--will result in further shifts in risk scores.