Sicker people’s tendency to choose some health insurers’ individual plans over others is so strong, and so hard to predict, that some big health insurers are facing huge Affordable Care Act risk-adjustment bills for 2016.
Aetna Inc., for example, might have to pay about $29 per month per individual major medical enrollee, or a total of $375 million, into the ACA risk-adjustment program for 2016, because its enrollees looked so much healthier than the market average, according to data from analysts at Mark Farrah Associates.
Kaiser Permanente, a big managed care company, might have to pay an average of about $32 per month per enrollee, or a total of $355 million, into the program because of its own enrollees’ lack of obvious chronic conditions.
Other issuers, including GuideWell, the parent of Blue Cross and Blue Shield of Florida, and Blue Shield of California, seem to be attracting a flood of sick enrollees.
GuideWell could collect $45 per individual major medical enrollee for the risk-adjustment program for 2016.
California Blue could collect $30 per month.
Analysts at the Centers for Medicare and Medicaid Services, the arm of the U.S. Department of Human Services that runs the program, estimated in June, when they released the full 2016 ACA reinsurance and ACA risk-adjustment report, that the average 2016 monthly premium was $392 per month.
Mark Farrah reports show that Aetna averaged about $302 per month per enrollee in 2016, and that GuideWell averaged about $412. Those figures mean that Aetna might pay about 10% of its 2016 individual major medical revenue into the program, and GuideWell might be counting on getting payments equal to more than 10% of its premium revenue from the program.
ACA Risk-Adjustment Basics
Drafters of the Affordable Care Act imposed many new benefits requirements on issuers of individual and small group coverage, and they banned most of the underwriting rules and strategies insurers once used to protect themselves from medical claim risk.