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
example, high deductib...

Source: The Health Care Blog - October 24, 2019 Category: Consumer Health News Authors: Christina Liu Tags: Health Policy Obamacare ACA Marketplace Affordable Care Act Health insurance Jonathan Halvorson Risk adjustment Source Type: blogs