Behind vows by the new Congress and incoming administration to revisit and potentially undo at least some of the Patient Protection and Affordable Care Act is the question of the future commercial viability of the individual health insurance market segment. The Affordable Care Act intended to restore the segment to functionality by effectively forcing sellers and buyers together with mandates to offer and purchase coverage, respectively, along with a mix of incentives and disincentives.
Health plan issuers aren’t confident the reforms have worked as intended, concerned over less than optimal spread of risk among healthy and less healthy individuals and gaming of enrollment rules that result in people not being continuously covered, playing havoc with their actuarial calculations. But despite their misgivings that led some to pull back their presence in the individual market for plan year 2017, health plan issuers are also concerned policymakers will leave the market even more unbalanced and uncertain than under the Affordable Care Act. That combined with a rapid rise in medical utilization could spark a crisis of confidence sending plan issuers scrambling for the exits, effectively throttling the individual market and sending it into a rapid, fatal death spiral.
That in turn will lead to an even bigger policy question at time when self-employment is growing faster than expected. Where will the self-employed get protection from large, unexpected medical expenses with no commercially viable individual market? One possibility is a government operated individual plan like that outgoing President Barack Obama initially opposed but earlier this year endorsed to increase choice and access to individual coverage in states with few individual plan offerings. Now the so-called public option may end up being the only option — if the new Congress and administration go along — for those not in government or employer sponsored coverage if the individual health insurance market cannot remain commercially viable without retaining the Affordable Care Act mandates on both the sell and buy sides.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email