An American
Academy of Actuaries panel analyzes a handful of popular health-law proposals
The actuarial academy had its Individual and Small Group
Markets Committee talk about the pros and cons of increased subsidies, risk
pools and other efforts to make the ACA work better. (Photo: Getty Images)
Some Affordable
Care Act change proposals that sound good on paper might jack up claims, chase
customers away, or cause other unexpected problems.
In short,
health insurance policy is complicated.
Members of the
Individual and Small Group Markets Committee, an arm of the Washington-based
American Academy of Actuaries, make that point in a look at many popular ideas
for improving the ACA system.
The actuaries
at the academy are people who have taken exams showing they understand
statistics and risk analysis.
The academy is
a professional association that tries to give policymakers and the public
objective advice regarding risk and financial security issues.
The academy's
Individual and Small Group Markets Committee prepared the new ACA report to help
readers, including insurance agents and brokers, understand what possible
alternatives to the current ACA rules might do to the commercial health
insurance market.
Here's a look
at some of what the committee said about five commonly discussed ACA change
ideas.
1. Spend more government money on subsidies.
Increasing
subsidy amounts might be expensive for the government, but it could greatly
improve the quality of the commercial health insurance risk pool by cutting
healthy people's out-of-pocket premium costs and making the idea of buying
health coverage more attractive, the actuaries say.
"The
impact of any changes in subsidies on enrollment, premiums, and government
spending would depend on the details," the actuaries say.
One problem
with the current subsidy program is that net coverage costs are higher for
healthy older adults as well as older adults with known health problems, the
actuaries say.
"Enrolling
low-cost individuals of all ages should be the goal," the actuaries say.
2. Shorten the open enrollment period.
The individual
major medical open enrollment period, or time when people can now buy health
coverage without showing they have what the government thinks of as a good
excuse to buy health coverage, now runs from Nov. 1 through Jan. 31.
Insurers,
regulators and ACA public exchange managers developed the open enrollment
period system to discourage healthy consumers from waiting until they know they
will be sick to pay for coverage.
Simply ending
open enrollment on Dec. 31 would help health insurers by giving them a better
idea of who their enrollees will be in the coming calendar year, the actuaries
say.
Shortening the
open enrollment period would also further reduce opportunities for consumers to
wait until they get sick to pay for coverage, the actuaries say.
3. Add barer-bones 'copper' level plans.
Current ACA
rules let insurers sell major medical plans in four levels of
benefits richness, ranging from bronze to platinum.
Young consumers
and consumers who do not qualify for subsidies can buy a fifth type of
coverage, catastrophic coverage.
Some ACA
watchers have argued that regulators should let insurers sell catastrophic
coverage or another type of plan, bare-bones "copper" coverage, to
all consumers. This could help consumers who feel that even a bronze plan is
unaffordable.
Adding copper
plans could increase plan sales to healthy people. But since the premiums for
the plans would be lower, the copper plans would hurt the risk profile of the
richer plans, the actuaries say.
The copper
plans or catastrophic plans would also have high cost-sharing requirements,
and, in practice, many consumers would have a hard time handling the
out-of-pocket costs, the actuaries warn.
4. Let insurers widen the gap between what the youngest and oldest
enrollees pay.
Today, the ACA
lets an insurer charge its oldest enrollees only three times as much as they
charge the youngest adult enrollees.
Some want to
let insurers charge the oldest enrollees five times as much.
Widening the
allowable age variation "would more closely align premiums to underlying
costs by age," the actuaries say.
One study
showed a plan that would cut premiums 22 percent for 21-year-olds.
But the same
study showed that approach would increase premiums by 29 percent for
54-year-olds, "likely reducing older adult enrollment, while also
increasing federal costs for premium subsidies due to the higher
premiums," the actuaries say.
In that
scenario, older adults who cannot qualify for subsidies might drop their
coverage, the actuaries say.
The actuaries
say widening age variations could increase ACA subsidy costs by $11
billion in 2018, if other current program rules stay in effect.
5. Set up high-risk pools for people with health problems.
Some Republicans
and insurers have talked about the possibility of bringing back high-risk
pools, or special subsidized health insurance programs for people with serious
health problems such as cancer, heart disease or Type 1 diabetes.
In the past,
when states set up risk pools, "enrollment has generally been low,
coverage has been limited and expensive, they require external funding, and
they have typically operated at a loss," the actuaries say.
The government
has to provide substantial funding to make any new risk pools sustainable, the
actuaries say.
Over time, the
actuaries say, the benefits of putting high-risk people in risk pools shrink,
as the health of high-risk people and other people becomes more similar, and
that would put upward pressure on premiums, the actuaries say.
Another,
comparable approach might be to take the money that could be used to subsidize
risk pools and instead give the money to ordinary health insurers that happen
to cover high-risk people, the actuaries say.
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