Adverse Selection
Adverse selection, when healthy and less healthy individuals differentially select health plans according to their health needs, is a serious risk to insurance markets and prevention is critical to ensuring a stable, well-regulated market.
*Milestone details:
*Full name: Analyze possible sources of adverse selection in the exchange and adopt strategies designed to mitigate that risk.
*Relevance to the ACA:
The ACA has many provisions intended to prevent adverse selection. Plans that offer insurance through an Exchange face requirements designed to alleviate adverse selection, but plans outside the Exchange face fewer rules. Sections that relate to potential adverse selection include:
§1301 - Requires plans offered in the Exchange to offer at least a silver and gold plan and to charge the same prices for the same products inside and outside the Exchange.
§1312 - Establishes consumers’ rights to enroll in any qualified health plan, regardless of whether the plan is offered through the Exchange.
§1341 - Requires states to establish or contract with a non-profit reinsurance entity to carry out the reinsurance program and to adopt specific federal standards related to the program.
§1343 - Requires states, in conjunction with the Secretary of HHS, to establish criteria for risk adjustment and to conduct risk adjustment for plans in the individual and small group market. States will assess a charge on low actuarial risk plans and make a payment to high actuarial risk plans.
§1401 - Establishes refundable premium tax credits for individuals at or below 400% FPL and makes the Exchanges the vehicle for receiving the credits.
§1501 - Requires individuals to maintain minimum essential coverage or face a tax penalty, unless they qualify for a financial or religious exemption.
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Maryland
I work with a number of small to midsized carriers across the nation and several carriers have told me that some of their larger competiting carriers in their market place have been advising small group clients to take early renewals in November or December to avoid many of the reforms. I can see how this would affect the change in age rating and perhaps plan offering, if the plans was not grandfathered but as far as I can see it would not effect the various taxes and fees that the insurance company woiuld be libale for such as the Health Insurance Tax and the Transitional Reinsurance Tax. One carrier has said the offer can only apply in Colorado and Florida which makes no sence to me. Other than a cheap slight of hand to avoid a few months of the age band changes and perhaps the benefit changes I can’t see much of an advantage. I souldn’t say that, as the two mentioned changes could be significant in the case of groups with lower average ages and low benefits. Other than that what am I missing
District of Columbia
In December's Health Affairs, Joseph Newhouse and coauthors report from their study that new policies designed to reduce selection in the Medicare Advantage program were largely successful. The authors are optimistic that insurance exchanges will be equally as effective at efforts to reduce risk selection.
Connecticut
In soliciting stakeholder feedback on health reform CT asked participants to comment on this question of adverse selection. See five documents a the bottom of the linked page:
In April 2011, the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) Initiative sponsored an invitational meeting to foster discussion among expert researchers, policymakers, insurers, actuaries, and analysts focused on insurance pricing in the individual and small group markets once the Patient Protection and Affordable Care Act (ACA) is fully implemented on January 1, 2014. The purpose of this brief is to provide a summary of the meeting discussion and inform other interested individuals.
District of Columbia
This presentation to the New Mexico Legislative Finance Committee describes the goals and functions of the Exchange in New Mexico, outlines decisions the state needs to make, and highlights statutory considerations for establishing the state's Exchange.
Access the presentation here:
http://www.statereforum.org/sites/default/files/nm_exchanges.pdf
District of Columbia
This bill, introduced by the House of Representatives, would establish a state health benefits Exchange and requires its governance structure to be in place by July 2012. The bill leaves many future decisions up to the legislature and governor, but does specify that the Exchange shall be governed by a public-private partnership. The Washington State Health Care Authority, in consultation with the legislature’s Joint Select Committee on Health Reform Implementation, would develop a set of options for a variety of implementation decisions. Access the bill here: http://www.statereforum.org/sites/default/files/1740-s.pdf
District of Columbia
This bill establishes a Health Benefits Exchange and creates a health benefit development board. The board is charged with creating a development plan that contains recommendations on goals, functions, governance, regional exchanges, financial sustainability, market impacts, and plan certification. Access the bill here: http://www.statereforum.org/sites/default/files/wa_sb5445.pdf
District of Columbia
These draft policy recommendations on an insurance Exchange were submitted to the OR Health Policy Board. Access the draft recommendations here: http://www.statereforum.org/sites/default/files/or_oha_expolicyrecs_0813...
District of Columbia
These comments to HHS outline the major factors OR plans to consider in developing an Exchange. Access the comments here: http://www.statereforum.org/sites/default/files/or_hhspublic_comments.pdf
District of Columbia
Senate Bill 99 was introduced in the Oregon Legislature in 2011. If enacted, it would define the structure and governance of the Exchange, specify the functions of the Exchange, outline who may purchase insurance through the Exchange, and establish a fund to support Exchange operations.
Access the legislation here:
http://www.statereforum.org/sites/default/files/relating_to_oregon_healt...
District of Columbia
This report, issued by the Illinois Health Care Reform Implementation Council, provides an overview of issues to be addressed immediately, such as establishing an Exchange as a quasi-governmental entity, and issues that will need to be addressed after more information gathering by the Council. The Council’s report also recommends establishing workgroups focused on systems design, workforce, and quality improvement.
Access the report here: http://www.statereforum.org/sites/default/files/il_hric_initial_report.pdf
California
The document is MD's response to the HHS request for comments on insurance exchanges.
Access the comments here:
http://www.statereforum.org/sites/default/files/maryland_0.pdf
District of Columbia
This Mercer report for the Maryland Health Benefit Exchange Board provides recommendations on potential sources of adverse selection, potential risk adjustment strategies and the potential impact of insurance rules for the exchange.
District of Columbia
This draft legislation establishes an Exchange under the authority of the Insurance Commissioner and outlines the functions and duties of the IA Exchange. Access the bill here:
http://www.statereforum.org/sites/default/files/iowa_sf_235-1.pdf
District of Columbia
A presentation by Sandra Shewry on California’s recently passed health insurance exchange legislation, which covered issues other states might consider, such as purpose, governance, and authorities and tools. Access the presentation here:
http://www.statereforum.org/sites/default/files/nashp_shewry_ca_exchange...