Dive Brief:
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Federal regulators will need to modify the Affordable Care Act (ACA) risk adjustment program if policymakers make changes to the individual and small group health insurance markets, according to a new report from the American Academy of Actuaries.
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The group pointed to potential changes, including loosening issue and rating rules, incorporating high-risk pools, allowing sales across state lines and eliminating federal essential health benefit requirements.
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The American Academy of Actuaries released the report as the Senate is working on its healthcare reform plan after the House of Republicans narrowly passed a reform plan last week.
Dive Insight:
Any changes to the ACA would likely require policymakers to modify the risk adjustment program. Not doing so could create instabilities in the market and would likely cause payers to leave the exchanges. The risk adjustment model and formulas are used to decide payments for insurers. The formulas allow payers to balance healthy members with less healthy enrollees.
"Risk adjustment plays an important stabilizing function in the individual and small group markets, leveling out the differences in risk among enrolled populations through payments to and from insurers," said Academy Senior Health Fellow Cori Uccello. "The risk adjustment program reduces incentives for insurers to avoid enrolling people at risk of high health spending, thereby supporting the ACA's protections for people with pre-existing conditions. But some changes in market rules would make it more difficult for the risk adjustment program to operate as intended."
Some of the changes considered in the paper are certainly possibilities with what the GOP is considering as it works to repeal and replace the ACA. The bill that passed the house includes high-risk pools as a method for helping cover people with pre-existing conditions and would also allow states to circumvent the ACA's essential health benefits. President Donald Trump frequently cited allowing plans to be sold across state lines as a goal during his campaign. These concepts, which have been popular in conservative circles for years, have little evidence of improving access to care.
There is already significant payer unease in the ACA exchanges market. Payers are concerned about whether the federal government will maintain cost-sharing reduction (CSR) subsidies for insurers in the ACA exchanges. The CSR payments help payers cover lower income Americans.