Following Recent Trends In Affordable Care Act Insurance

Law360, September 9, 2016

In an article, “Following Recent Trends In Affordable Care Act Insurance,” Analysis Group Senior Advisor Anita Chawla comments on the challenges insurers face when participating in the marketplaces created by the Affordable Care Act (ACA). The authors note that insurers must balance the mandate to offer certain essential health benefits with the need to maintain profitability. Some insurers are finding that enrollment of low-cost, healthy individuals is falling short of expectations, at the same time that legislated compensation to encourage enrollment of chronically ill adults is proving inadequate. As a result, some insurers are choosing to exit ACA marketplaces entirely rather than face losses, while others are exploring limited benefit structures to manage enrollment more profitably. The authors also note that insurers who choose to offer limited benefit structures may run the risk of lawsuits arising from two types of claims: 1) that consumers were misled regarding covered benefits or 2) that benefit design was discriminatory towards individuals with chronic illnesses. Both types of risk influence the nature of the plans that insurers choose to offer on the ACA marketplaces and whether they continue to participate in the marketplaces at all. While future changes to the risk-adjustment model, recently announced by the Centers for Medicare and Medicaid Services, will more appropriately compensate plans that cover individuals who have high medical costs, such as chronically ill adults, the authors caution that continued pressure to maintain profitability while avoiding discrimination lawsuits could drive additional insurers to exit the marketplaces before these changes go into effect in 2018.  

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Chawla A, Cook K