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Life Health > Health Insurance > Your Practice

NAIC to Feds: Figure Out What You Want to Do

By Allison Bell

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If the federal government decides to get rid of the Affordable Care Act individual health insurance ownership mandate, maybe it should rethink the objectives for its health reform efforts, state insurance regulators say.

The National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has issued a statement about the matter in response to a U.S. Government Accountability Office report on possible alternatives to using an individual health coverage ownership mandate as a method for controlling adverse selection in the universal health coverage access system that is supposed to be created by the Patient Protection and Affordable Care Act (PPACA).

Republicans are trying to block implementation of PPACA. If the act takes effect as written, health insurers will have to sell coverage to all applicants, no matter how sick the applicants are, with only limited ability to charge more for sicker applicants.

Health insurers and others have argued that, unless there are some restrictions on people with health problems buying coverage or a tough coverage ownership mandate, or both, many young, apparently healthy people will wait until they are very sick to buy coverage.

John Dicken, a GAO director, says in the report that some experts have suggested that health insurance agents and brokers could play a role in preventing adverse selection.

The NAIC suggests that the idea of trying to offer universal access to health coverage without an individual ownership mandate may be unrealistic.

“The stated objective of federal health insurance reforms is to create a marketplace where everyone,

no matter their condition, age or health history, can choose between a variety of health plans without fear of rejection or being priced out of the market,” NAIC officials say in their statement.

But, unless a significant majority of the population participates in the insurance pool reforms that are supposed to protect consumers will lead to higher premiums and fewer choices, the NAIC officials say.

“The question the GAO report seeks to answer is: Are there other alternatives to the individual mandate that will encourage participation and avoid adverse selection?” the officials say. “We applaud this much-needed discussion and urge [the GAO] to go further and ask not just whether there are alternatives, but will any of these alternatives actually work as well as an individual mandate? If not, then the overall goal of health reform would need to be adjusted.”

Members of the American Academy of Actuaries, Washington, have suggested that there might be some changes that could reduce the effects of elimination of the coverage ownership mandate.

Some alternatives the academy lists are:

  • Late-enrollment penalties.
  • Open enrollment periods, with long gaps between open-enrollment periods
  • Auto-enrollment features.
  • Limiting the ability to upgrade to more generous benefit plans during open enrollment.

Other individual mandate coverage from National Underwriter Life & Health:

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