Improving the Affordable Care Act Markets (Part 2)

By JONATHAN HALVORSON In a previous post, I described how some features of the Affordable Care Act, despite the best intentions, have made it harder or even impossible for many plans to compete against dominant players in the individual and small employer markets. This has undermined aspects of the ACA designed to improve competition, like the insurance exchanges, and exacerbated a long term trend toward consolidation and reduced choice, and there is evidence it is resulting in higher costs. I focused on the ACA’s risk adjustment program and its impact on the small group market where the damage has been greatest. The goal of risk adjustment is commendable: to create stability and fairness by removing the ability of plans to profit by “cherry picking” healthier enrollees, so that plans instead compete on innovative services, disease management, administrative efficiency, and customer support. But in the attempt to find stability, the playing field was tilted in favor of plans with long-tenured enrollment and sophisticated operations to identify all scorable health risks. The next generation of risk adjustment should truly even out the playing field by retaining the current program’s elimination of an incentive to avoid the sick, while also eliminating its bias towards incumbency and other unintended effects. One important distinction concerns when to use risk adjustment to balance out differences that arise from consumer preferences. For exampl...
Source: The Health Care Blog - Category: Consumer Health News Authors: Tags: Health Policy Obamacare ACA Marketplace Affordable Care Act Health insurance Jonathan Halvorson Risk adjustment Source Type: blogs

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