Robert Wood Johnson Foundation Reports on Health Insurance Exchanges

Risky BusinessTwo new reports provide an in-depth look at some of the issues surrounding risk selection that states will face as they establish health insurance exchanges and Basic Health Plans (BHP). Funded by the Robert Wood Johnson Foundation’s State Health Access Reform Evaluation program, the reports are particularly timely as the Affordable Care Act’s (ACA) coverage expansions will soon bring previously uninsured, potentially high-risk individuals into state insurance markets. If a state’s exchange disproportionately attracts high-risk individuals—those in poor health or with lower income (and thus eligible for subsidies)—the insurance market could be disrupted, causing premiums to rise.In the first report, researchers at Mathematica Policy Research examined Massachusetts’ CommCare program—a program serving low-income adults, much like the ACA’s BHP is designed to do—and found that although there was an initial influx of older, high-risk enrollees, this diminished over time as the state implemented its individual mandate and began offering additional subsidies and auto-enrolling eligible adults. The authors note that BHPs could help buffer state exchanges from risk by separately pooling and financing low-income individuals.Read the Mathematica Report.Researchers at the University of Maine’s Muskie School of Public Service examined the implications of geographic rating, the practice of adjusting insurance premiums to reflect regional differences in the cost of health care, on risk pooling and insurance premiums. The report found no clear pattern among states’ use of geographic rating, suggesting that insurers could be using geographic ratings for purposes other than regional cost differences, which could ultimately undermine the efforts of the ACA to pool high-risk individuals and reduce disruptions to the insurance markets.Read the University of Maine Report.