What Risk Adjustment Does — The Perspective Of A Health Insurance Actuary Who Relies On It

For decades before the Affordable Care Act (ACA), American health insurers were very good at avoiding enrolling people who were likely to be high-cost in the individual (or “non-group”) health insurance market. When individuals applied for coverage, they were asked questions such as: “What illnesses do you have?” and “What medical treatment have you had in the last (choose one) three, five, or 10 years?” Any person that answered with a serious (or not so serious) condition was denied coverage. Others with less serious conditions may have been charged additional premiums for a pre-existing condition or had exclusions of certain services or conditions in their policies. That all changed on January 1, 2014 with the ACA. All insurers offering new policies in the individual market now are required to provide coverage to anyone who can pay his or her premium. This is known as a “guaranteed-issue” requirement. But even with this requirement, we can’t assume insurers truly offer coverage to everyone in the individual market. There are still ways for insurers to avoid the sickest people — the ones who might have future costs in the tens of thousands (or more) of dollars. Some methods appear innocuous — just aim advertising at healthy people who use gyms. Others are more controversial — develop networks of physicians or hospitals that discourage access to care with, for example, fewer oncologists. What could Congress do to minimize this avoidance of ...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Featured Following the ACA Insurance and Coverage Medicare Covered California guaranteed-issue requirement Medicare Advantage risk corridors safety net and value Source Type: blogs