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Academy of Actuaries Reaffirms Association Health Plan Risks

Association health plans likely pose a risk for individual healthcare markets and expanding Medicaid protections.

Association health plan risks communicated by Academy of Actuaries

Source: Thinkstock

By Thomas Beaton

- The American Academy of Actuaries released a statement reaffirming its concerns with expanding association health plan (AHPs) availability in light of perceived risks to the individual insurance marketplace.

The statement precedes President Donald Trump’s State of the Union address and aims to provide lawmakers an objective and non-partisan analysis of potential implications regarding federal healthcare reform.

The Academy’s leadership seeks to protect social entitlement and public payers such as Medicare and Medicaid that are critical for individuals who rely on their benefits.

“The American Academy of Actuaries’ mission is to provide objective and nonpartisan actuarial analysis of public policy — and this information aids Social Security, Medicare, Medicaid, and the public and private pension plans and insurance systems that millions of Americans depend on,” said President Steve Alpert.

“As we learn the president’s priorities for 2018, and Congress debates proposals affecting the sustainability, design, and other aspects of these plans and systems,” he continued, “the Academy’s expert fellows are available to discuss their actuarial implications.”

Previously, the association claimed AHPs could adversely affect health plan selection by driving individuals to seek out cheaper health plans with less comprehensive benefits.

Other downstream effects of adverse selection would include destabilized risk pools in the individual market as well as rising premiums and insurance costs for consumers. The association additionally argued that AHPs also may not have the negotiating clout with providers that traditional health plans have, which means consumers could pay more for healthcare services.

“Expansion efforts can affect the composition and balance of insurance risk pools, insurer participation in markets, and costs and risks to policyholders, taxpayers, insurers, and other stakeholders,” the association stated.

The association also asked to the President and lawmakers to consider solutions to protect public payer programs such as Medicaid and Medicare, which could face financial implications because of proposed policies that drastically change public payer funding.

In a March 2017 report, the association suggested that lawmakers allow states to be flexible in their Medicaid programming if they received block grant funding.

Block grants, which have been proposed in ACA policy debates last year, provide states a bulk payment to fund Medicaid programs based on federal limits.

“Medicaid block-grant and similar funding proposals have the potential to significantly impact state budgets, Medicaid enrollees, providers, managed care organizations, and other health care system stakeholders,” the association said.

The use of block grants or per capita funding caps would create higher financial risk to states so states would need new flexibilities to modify components of their Medicaid programs to stay within a set budget.

The association also believes that the Medicare Hospital Insurance Trust Fund will deplete by 2029 and suggested that other public payer trust funds may pick up the slack in revenue generation.

“Increased general revenue contributions, premiums, and cost-sharing for the Supplementary Medical Insurance Trust Fund will put financial pressure on beneficiaries and the federal budget,” the association added.

Heated debates between the White House and Congress could lead to rocky policy foundations that affect payers, which may drive additional payer-related stakeholders to increase education, engagement, and outreach on the potential ACA reform implications.

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