Exchange exec sees AHCA hurting health claim ratios

The head of California’s state-based Affordable Care Act public exchange program says poorly designed efforts to stabilize the individual health insurance market could backfire, by chasing healthy people out of the market.

Peter Lee, the executive director of Covered California, talked about the possible side effects of health system change Tuesday, during a Covered California board meeting in Sacramento, California, that was streamed live on the web.

Lee gave the board a presentation on the American Health Care Act draft that the House Ways & Means Committee and the House Energy & Commerce Committee approved March 9.

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Lee said anyone looking at that the AHCA proposal, or others, needs to recognize that big increases in out-of-pocket coverage costs for low-income or moderate-income consumers will cause many to do without health coverage.

“We want to foster the right mix of risk,” Lee said.

If would-be ACA changers try to reduce out-of-pocket coverage costs for people in their 20s by increasing out-of-pocket costs for people in their 50s and 60s, insurers might attract more healthy young enrollees, Lee said.

But insurers might lose especially large numbers of older enrollees who happen to be healthy, and already pay higher premiums, and that could hurt their benefits-to-revenue ratios, Lee said. 

The AHCA draft would replace the current income-based ACA premium tax credit subsidy with an age-based tax credit. The tax credit would phase out for individuals earning more than $75,000 per year and families earning more than $150,000. For consumers under the phase-out level, the tax credits would not vary with income. 

Covered California analysts looked at how the age-based tax credit would affect typical exchange plan users in Los Angeles or San Francisco.