Big health insurers can all survive serious, lasting problems with the Affordable Care Act risk-adjustment program, according to analysts at Fitch Ratings.
“However, Fitch believes that there are likely to be some non-Blue health plans that will face material capitalization pressure if they must write the entire receivable off,” the analysts say.
Even at the big health insurers that survive serious ACA risk-adjustment program problems with their ratings intact, the turmoil could lead to big price increases, and, possibly, to market withdrawals, the analysts warn.
Bradley Ellis and other analysts at Fitch talk about the impact of ACA risk-adjustment program problems in a new commentary.
Back in 2008 and 2009, when Congress was drafting the Affordable Care Act, it eliminated many of the mechanisms health insurers once used to control medical claim risk. It tried to compensate by adding the risk-adjustment program.
The program is supposed to use cash from health insurers in the individual and small-group major medical markets that end up with low-risk enrollees to compensate health insurers that ended up with high-risk enrollees.
A U.S. District Court judge in New Mexico decided in February that the risk-adjustment procedures program managers have been using to redistribute cash are unfair to smaller, newer insurers.
Program managers at the Centers for Medicare and Medicaid Services (CMS) have suspended risk-adjustment program operations while the matter is in litigation.