- The ACA has failed to attract enough younger, healthier people to the public insurance exchanges, causing Aetna and other private insurers to exit the market rather than shoulder the costs of sicker people, according to Princeton economist Uwe Reinhardt.
- To deal with adverse risk selection — where sicker-than-average individuals buy insurance while younger, healthier ones don’t — some payers plan to raise premiums more than 25% in 2017.
- That will lead even more young, healthy individuals to forego obtaining ACA coverage, creating even greater adverse risk selection, Reinhardt says.
In employer-based health plans, rates are the same for all members of the company, so that the contributions of healthy workers end up subsidizing their sicker coworkers. The ACA intended to create the same scenario in the public exchanges, but the penalties for not acquiring coverage are relatively small and many young and healthy people have just opted to take their chances being uninsured.
“It is hard to see a way out of this dilemma, given the current political climate,” he adds. “The task is doubly difficult in the United States, because the health care system is structured to yield prices for health care products and services that are twice as high or higher than the prices of identical items in other countries, driving US per capita health spending also to be twice as high as in many other developed countries.”
Reinhardt points out that rising premiums are normally linked to high growth in health spending, but that’s not the case here. Citing Centers for Medicare & Medicaid Services estimates, he says national health spending is only expected to growth 4.8% this year and just 5.8% annually from 2015 to 2025.