Requiring individual and small group plans to offer “actuarially equivalent” benefits packages may not be enough to prevent adverse selection in the U.S. health insurance market in 2014, Karl Ideman says.
Ideman, president of Pool Administrators Inc., Glastonbury, Conn., wrote to the Exchanges Subgroup at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., about subgroup efforts to prevent adverse selection once a new health insurance exchange system comes to life.
Many Republicans and some Democrats are trying to block implementation of part or all of the Patient Protection and Affordable Care Act (PPACA).
If the act takes effect in 2014 as written, the act will create a system of health insurance exchanges that will distribute individual and small group health insurance. Federal law and states are supposed to set minimum quality standards for plans sold through the exchanges and require the plans to offer a “minimum essential benefits package.”
Other PPACA provisions will require carriers to sell individual and small group coverage on a guaranteed issue, mostly community-rated basis starting 2014.
Carriers will be able to charge older insureds more, but they will not be able to base rates or application decisions on an applicant’s health status.
Many health policy experts worry that differences between the exchange sales climate and the non-exchange sales climate, or subtle differences between the plans sold on and off the exchanges, will lead to older, sicker applicants flocking to one type of plan or another.
Ideman’s company, Pool Administrators, Inc. (PAI), has been helping states run risk pools
and small group health insurance pools for about 20 years.