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3 ACA individual health market survival ideas

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If Congress and federal agencies want to keep the tough Affordable Care Act restrictions on individual health insurance medical underwriting alive, they need to do more to get young, healthy people to pay for health insurance.

Witnesses gave that message today in Washington, at a hearing on rising individual health insurance premiums organized by the House Oversight and Government Reform.

The Republican leaders of the committee noted in the hearing background materials that individual health premiums appear to be on track to rise sharply in 2017, and that five major health insurers have reported losing hundreds of millions of dollars on sales of ACA public health insurance exchange products.

Related: House Democrat tears into chief

Drafters of the ACA created the public exchange system, a premium subsidy tax credit system, and new tax penalties on the uninsured and underinsured in an effort to support an almost-total ban on medical underwriting in the individual major medical market.

Issuers of new individual major medical coverage cannot take health factors other than age and location into effect when pricing coverage, and they cannot use factors other than age, location and tobacco use when pricing coverage.

In the past, many state efforts to impose bans or near bans on medical underwriting failed when the youngest, healthiest people either refused to buy any health coverage or found ways to get cheaper coverage outside the main, “community rated” market.

Related: Milliman Analyzes Effects Of Coverage Access Initiatives

Al Redmer Jr., Maryland’s insurance commissioner, who testified on behalf of the Kansas City, Missouri-based National Association of Insurance Commissioners, said one of the factors leading to turmoil in the individual health market has been a combination of lack of information about how the ACA-shaped market would work and rigid rate filing deadlines.

Even when insurers set their 2016 rates, they had only a little information about how the ACA market really worked, Redmer said.

“Insurance hates uncertainty,” Redmer said.

Federal regulators have aggravated that uncertainty by rolling out big, major new ACA regulations, and revisions of ACA regulations, several times a year, Redmer said.

Chris Carlson, an Oliver Wyman actuary who represented the Washington,D.C.-based America’s Health Insurance Plans at the hearing, and Kurt Giesa, an Oliver Wyman actuary who represented the Chicago-based Blue Cross and Blue Shield Association, talked about many of the same ideas their groups of been promoting for years.

They emphasized the need for insurance regulators and exchange managers to strengthen and enforce existing individual major medical eligibility standards, such as a requirement that most people sign up for major medical coverage from Nov. 1 through Jan. 31.

Related: New exchange screening rules slash sales

Carlson and Giesa also recommended repealing the ACA insurer fee, which is supposed to raise billions of dollars in revenue from insurers, and letting insurers widen the gap between they rates they charge the oldest enrollees and the rates they charge the youngest. Because insurers now keep rates for older enrollees artificially low, the rates for the younger enrollees are artificially high, and that chases away younger consumers, the witnesses said, according to the written versions of their testimony.

Witnesses also talked about some less widely discussed ideas.

For a look at some of the other more offbeat ideas given in the written testimony, read on:

The Blues would like to give enrollees an incentive to stay enrolled. (Image: Thinkstock)

The Blue Cross and Blue Shield Association would like to give enrollees an incentive to stay enrolled. (Image: Thinkstock)

1. Reward people who stay covered

“Congress could pass legislation to … allow issuers to reward insureds for maintaining continuous coverage through benefit designs and other means,” Giesa said.

Related: Producers to Feds: Beware of games

Broken umbrella

A healthy policy specialist says states should insure the health insurers. (Image: Thinkstock)

2. Encourage states to set up reinsurance programs

Topher Spiro, a health policy specialist at the Center for American Progress, a nonpartisan Washington,D.C.-based research center that happens to employ many Democrats, said he believes talk about a crisis in the individual market is the product of media hype.

“Contrary to popular perception, the ACA ‘risk pool’ — the balance of health and sick enrollees — is stable and improving,” Spiro said. “From 2014 to 2015, the cost per enrollee in exchanges actually fell by 0.1 percent.”

In the markets that are having problems, states can help by following the example set by Alaska and establishing single-state reinsurance programs, to replace the expiring temporary ACA reinsurance program, Spiro said.

Because the single-state reinsurance programs will help hold down health insurance premiums, that will hold down federal ACA premium tax credit subsidy costs, and states can tap the projected federal tax credit subsidy savings to pay for the reinsurance programs, Spiro said.

Related: One Wellmark enrollee filed $18 million in 2015 claims


Spiro Topher would like to see regulators ban or phase out the off-exchange individual health insurance market. (Image: Allison Bell)

3. Keep the off-exchange market at bay

The locally based Vermont and District of Columbia ACA exchanges do still work with agents and brokers, but they require all individual and small-group insurance sales to move through their exchanges.

The D.C. exchange has made a point of trying to reach out to brokers, but the Vermont exchange alienated brokers early on by saying it would pay producers only $17 per month for helping enrollees.

Spiro said in his testimony that states should either “prohibit insurers from selling plans exclusively outside of the exchange,” or “go further and require all plans to be sold through the exchange.”

Eliminating the off-exchange market will reduce administrative costs, and eliminating the need for exchange plans to compete with off-exchange plans will reduce the likelihood that the off-exchange plans will, “in effect, steal enrollees who might help broaden and balance the risk pools of other insurers,” Spiro said.


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